The answer to the oft asked question “Where is the stock market headed?” is that simple-no one knows. Some feel that because U S stocks have risen so much in the last 6 ½ years (since we bottomed out in March of 2009), they have nowhere left to go.  With that said, we’d like to add some perspective to this conversation about where the market is now.

It surprises some to learn that the return of U S stocks over the last 15 years has been WAY below their long term average.  The average 15 year compounded return is 10.7%, but the most recent trailing 15 year period return is 5.1%, which is lower that almost 90% of all 15 year rolling periods since 1926.  If you believe that returns have a tendency to move back to the average, you could make a case based on this data for returns over the next 15 years to possibly be higher than the 10.7% average.

Ibbotson Associates
Ritholtz Wealth Management

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