Word: stockely
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...history shows that excellent returns are available to stockholders who survive such rough patches. In fact, following the 13 10-year periods of negative returns stocks have suffered since 1871, real returns over the next 10 years have never been negative and have averaged more than 10% per year. A 10% return far exceeds the stock market's long-term average real return of 6.6% and is more than three times the real return offered by U.S. Treasury bonds. Furthermore, stocks have always done better than bonds over every 30-year period since 1871. (See the 10 big recession surprises...
...Skeptics claim that statistics such as these are biased in favor of equities because they are derived solely from long-term U.S. data. But the excellent historical returns of stocks are not limited to the U.S. Three U.K. economists - Elroy Dimson, Paul Marsh and Mike Staunton - have examined the historical stock and bond returns from 16 countries since 1901 and published their research in a book entitled Triumph of the Optimists: 101 Years of Global Investment Returns. Despite wars, bouts of hyperinflation and depressions, stock investors in all 16 countries examined enjoyed high returns that outpaced fixed-income assets...
...Equities bears maintain that the recent stock rally has already outrun fundamentals and that stocks are no longer cheap. To be sure, based on projected operating earnings for all of 2009, S&P 500 companies are trading at an average price-earnings ratio of nearly 19, higher than the long-term historical average of 15. But basing stock values on 2009 data is inappropriate. This year saw the bottom of the worst recession since World War II. What is relevant for determining stock values are future earnings, not past earnings. Next year's operating earnings for S&P 500 companies...
...Bill Gross, the head of PIMCO, has joined other bears by claiming the U.S. economy is entering a "new normal" era of slower economic growth and limited stock returns because American consumers have become thriftier. Instead of spending, they are paying off their heavy debts, and this will weigh on corporate earnings indefinitely. Yet it is world economic growth, not U.S. growth, that will dictate future stock returns. S&P 500 companies now obtain almost half of their revenue and profits outside the U.S. That share will most certainly rise as growth in the emerging nations continues to outpace that...
...Read "Stock Rally Isn't Over, Says Wells Fargo's Hartman...