A new analysis reveals sobering conclusions

  • The stock market’s return over the next decade is unlikely to be as good as the last decade’s
  • A new analysis breaks down the stock market’s likely next-decade return into four components
  • The forecasted excess-of-cash return over the next decade is 3.4% annualized
  • The stock market’s earnings multiples would have to nearly double for it to come close to the last decade’s return
  • Basing retirement planning on high CAPE ratios is risky

Many people are hoping for the stock market to continue its stellar returns from the past decade, but it’s important to have realistic expectations. A new analysis breaks down the stock market’s likely next-decade return into four components: real cash return, dividend yield, and real earnings growth rate. The forecasted excess-of-cash return over the next decade is 3.4% annualized, which means the stock market’s earnings multiples would have to nearly double to match the previous decade’s return. Basing retirement planning on high CAPE ratios is risky and may not be a wise strategy.

Public Companies: AQR Capital Management (null)
Private Companies:
Key People: Jordan Brooks (Principal at AQR Capital Management), Mark Hulbert (Regular contributor to MarketWatch)

Factuality Level: 7
Justification: The article provides analysis and forecasts based on historical data and statistical models. It presents different components that contribute to the stock market’s return and discusses the implications for retirement planning. While the analysis is based on data and models, it is still a forecast and there is uncertainty involved. Overall, the article provides information and analysis that is relevant to the topic and does not contain any obvious misleading or sensationalistic elements.

Noise Level: 3
Justification: The article provides a thoughtful analysis of the stock market’s likely return over the next decade based on different components. It challenges the belief that the stock market will continue to perform as well as it has in the past and highlights the overvaluation of the current market. The analysis is supported by data and examples. However, the article contains some filler content and repetitive information, which lowers its overall noise level.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses the stock market and its potential returns, which can impact financial markets and investors.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article focuses on financial topics, specifically the stock market and its potential returns. It does not mention any extreme events or their impacts.

Reported publicly: www.marketwatch.com