Over the past 50 years, there’s never been a single year when real (inflation-adjusted) GDP grew by 8.7%, let alone notching that rate for an entire decade. The S&P 500’s earnings per share grew an inflation-adjusted 2.4% a year in the 1970s, fell 0.7% a year in the 1980s, grew 4.7% in the 1990s, slid 1.9% in the 2000s and soared 8.7% in the 2010s. Even over decade-long stretches, earnings growth has been all over the map.
I’m inclined to assume future earnings growth will be similar, but there are no guarantees. Assuming 2021’s corporate profits come in as expected, the S&P 500 companies will have notched average annual growth in earnings per share of 7.3% over the past five decades, or 3.3% a year after adjusting for inflation. To the dividend yield, Bogle would add expected earnings growth. Over the past 50 years, the S&P 500’s yield has averaged 2.8%.Įarnings. For buyers of the S&P 500 today, the starting dividend yield is some 1.3%, which is very low by historical standards. This is the one component of future returns that’s known for sure. Here’s what the Bogle method tells us about today’s expected stock returns:ĭividends.
He subsequently revisited the idea a number of times, including in his book Common Sense on Mutual Funds. What’s that? In a 1991 article for the Journal of Portfolio Management, Vanguard Group founder John Bogle-who died in January 2019-laid out a relatively straightforward method for estimating stock returns. But we can at least think about it in a reasonably logical way-by using what some folks call the Bogle method. stock returns we can expect over the next 10 years? Nobody knows for sure, of course. Removed Tts_version 4.TIME TO PLAY MARKET strategist. O元928757W Page_number_confidence 93.52 Pages 666 Partner Innodata Pdf_module_version 0.0.7 Ppi 360 Rcs_key 24143 Republisher_date 20210224182300 Republisher_operator Republisher_time 497 Scandate 20210221022900 Scanner Scanningcenter cebu Scribe3_search_catalog isbn Scribe3_search_id 9780470138137 Source Urn:lcp:commonsenseonmut0000bogl:epub:d5c614c7-39ca-46b7-88ad-51e8d0ab3e5d Foldoutcount 0 Grant_report Arcadia #4281 Identifier commonsenseonmut0000bogl Identifier-ark ark:/13960/t0cw4qq56 Invoice 2089 Isbn 9780470138137 Lccn 2009037064 Ocr tesseract 5.0.0-alpha-20201231-7-gc75f Ocr_detected_lang en Ocr_detected_lang_conf 1.0000 Ocr_detected_script Latin Ocr_detected_script_conf 0.9798 Ocr_module_version 0.0.11 Ocr_parameters -l eng Old_pallet IA19410 Openlibrary_edition Access-restricted-item true Addeddate 22:00:44 Boxid IA40066007 Camera Sony Alpha-A6300 (Control) Collection_set printdisabled External-identifier
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