Will The Markets Be Higher Ten Years From Now?

October 20, 2008 by Joe Ponzio

There have been some very good comments on What Drives The Stock Market. Today, we posted Will The Markets Be Higher Ten Years From Now? with our thoughts on what drives the stock markets and why investors – in the aggregate – should lower their expectations going forward.

Much of it was stolen from Warren Buffett; so, send him your hate mail. (This report will also provide insight into why Buffett held mostly US Treasuries the past few years (until now) in his personal portfolio.)

I won’t try to predict the actual level of the markets five- and ten-years from now; but, it is possible that growth will be very slow (4% to 6%) and it is highly probable that investors looking for long-term growth of 10%, 12%, or 15% in the markets going forward are likely to be very disappointed.

Buffett, on his reasoning that future investor returns of 5% to 7% are more likely than 10% to 15%:

Now, maybe you’d like to argue a different case. Fair enough. But give me your assumptions…The Tinker Bell approach – clap if you believe – just won’t cut it.

As always, this is an attempt to predict the future, which is cloudy at best. Still, I’d rather look through a foggy windshield than drive using only the rear view mirror.

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