Historical Stock Market Risk & Over Time

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Company, Country or Sector? What is the Average Source of Return for Global Stocks?

Company selection is the biggest component of stock returns.

Average source of return for global stocks

Vanguard's 10-Year Investment Forecast Predicts a +5.7% per Year Real Return

Excerpt:

"Vanguard predicts a most likely case of a +5.7% real annual returns for stocks, but other experts are more cautious.

In his new book, Rational Expectations, William J. Bernstein predicts a +2% real return for large-cap stocks and +3% for small-cap stocks over the next decade.

Rob Arnott, chairman of Research Affiliates, forecasts a +3% real return over the next decade."

My own opinion is that the future is even more uncertain than the ranges shown in the Vanguard model — especially on the downside.

And as I see it, the world is a less predictable place than ever before.

Read the entire report here...

Vanguard Capital Markets Model: 10-Year Investing Forecast

Why 2011 May Be A Middling Year...

The S&P 500 enjoyed double digit returns in 2009 and 2010.

A 3rd consecutive year of double-digit gains, however, would be an anomaly.

Since World War II, there have been 10 back-to-back double-digit advances.

Only twice (1951 and 1994) did the streak run to a 3rd year, and the average return in the 3rd year was only +1.7%.

High Unemployment Is Good for the Stock Market!?

Since 1948, the stock market has returned, on average, 6.6 times more per year when unemployment has been considered historically high than when it has been low!


According Ned Davis Research, when the rate of unemployment has been above 6%, the S&P 500 has gained ground at a rate of +13.9% per year.


However, when the unemployment rate was considered “low” (4.3% or below) the S&P has gained at an annualized rate of just +2.1% per year!

The Case for An Up Stock Market in 2011...

This year (2011) will be the 3rd year of Barack Obama's 4-year presidential term that began in January 2009. 

The S&P 500 stock index has posted a positive total return during the last 17 "presidential 3rd years." 

The last time the S&P 500 was negative during a "presidential 3rd year" was 1939! 

The average annual return of the S&P 500 during a "presidential 3rd year" since 1950 is a gain of +22.0%!


Source: BTN Research


   

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