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M*: The 30-Year Outlook for U.S. Stocks

FYI: Tuesday's column discussed the primary investment lesson over the past 30 years: Own equities. Own as much as possible for as long as possible. To a first approximation, it was never wrong to buy stocks, and never right to sell them.

Today's installment addresses the more difficult task of looking forward. It's one thing to appreciate how successful equities have been. It's quite another to determine whether their marvelous results will continue.


  • edited January 2019
    Here is the inflation adjusted prediction made by John Rekenthaler. It seems to result from well reasoned, middle of the road crystal ball gazing. The buildup to the prediction is worth a look.
    my stylized outlook is to accept the experts' view of 1% in average inflation-adjusted annualized gains over the next 10 years, then 6% annualized for the succeeding 20 years. If so, that would make the annualized average for the full, 30-year period 4.3%. Per this prediction, U.S. equities from 2019 to 2048 will have annual real returns that are about 1 percentage point less than my parents' generation, and about 2 percentage points behind what I have enjoyed.

    It's good to be me. That said, while the initial few years may be rough, this column's back-of-the-envelope analysis suggests that stocks should remain the purchase of choice for the patient, long-term investor, particularly if that investor suffers losses calmly. Some might be forthcoming.
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