Can Average Stock Returns Match the Performance of the 20th Century?

Abstract

This study examines likely stock market performance for the first two decades of the new century. The analysis indicates that the market is on course to be one of the most disappointing decades in market history on the basis of the average annual return for the decade, and that even the first 20 years of the 21st century are likely to show below-average performance. This is not based on a prediction of what the market will do but rather a combination of what has occurred and various alternatives for what could occur. The analysis has implications for investors particularly with regard to asset allocation decisions.