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Stocks for the Long Term: Why Prospects Are Rosy

by Dale Domian and William Reichenstein

Stocks For The Long Term: Why Prospects Are Rosy Splash image

You already know the bad news: U.S. stocks as measured by the S&P 500 lost almost 50% from the October 2007 peak though November 18, 2008. Most foreign stock indexes were off by a little more than 50% this year.

The good news is that based on today’s depressed prices, long-term stock prospects appear above average.

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About the author

Dale Domian , Ph.D., CFA, CFP, is professor of finance at York University in Toronto, Canada. He can be contacted at ddomian@yorku.ca.
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William Reichenstein , CFA, holds the Pat and Thomas R. Powers Chair in Investment Management at Baylor University. bill_reichenstein@baylor.edu.
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In this article, we take a look at some of the evidence that supports a rosy multi-year stock outlook, and provide a framework for applying these forecasts.

Theory

Without a crystal ball, can investors get a rough “forecast” of long-term stock returns?

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→ Dale Domian , Ph.D., CFA, CFP, is professor of finance at York University in Toronto, Canada. He can be contacted at ddomian@yorku.ca.
William Reichenstein , CFA, holds the Pat and Thomas R. Powers Chair in Investment Management at Baylor University. bill_reichenstein@baylor.edu.