Stock Returns in the 1990s

Abstract

This article addresses the issue of equity market returns at the start of the new millennium by considering the probabilities of various stock market returns occurring. The authors place the notable returns that have occurred in the 1990s into perspective, with a special emphasis on the very large returns during 1995–1998. They also consider the rate of return boundaries that might be expected if the future resembles the past. Such an analysis provides investors with a much better feel for the likelihood of achieving, or failing to achieve, various returns in the future. This analysis also provides some insight in to the Glassman-Hassert argument concerning the Dow at 36,000, a position that has received widespread attention. The authors conclude that their analysis suggests that a short-term movement to such a level is almost certainly not going to occur.