Analysts Forecast Muted Stock Market Returns Over Next Decade
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The stock market's stellar returns over the past decade are unlikely to repeat over the next decade. Basing plans on a repeat is "triumph of hope over experience."
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Analysis shows the stock market's excess return over cash can be broken down into 4 components, 3 of which are projected to contribute far less over the next decade.
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Dividend yield contribution expected to drop from 3.4% to 1.5%.
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Earnings growth contribution expected to drop from 5.3% down to 2.9%.
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For returns to match the past decade, price-earnings ratios would need to double from already stretched levels, an unlikely possibility.