Aswath 2022 recap
2022 had real returns of -23.48% which was the 6th worse year since 1928
Implied expected returns on stocks = 9.82% Risk free rate = 3.88%
(Using earnings growth rate of 6.41% in 2023 and 2024. 3.88% afterwards)
Equity risk premium is then 5.94% which is historically high, and consistent with a large drop in the stock market value
The notion that stocks always win in the long term is a dangerous one, and while those pushing it claim to have the data on their side, it is worth remembering that the use of US data to make this case is statistically flawed. The US was one of the most successful of global equity markets of the twentieth century, and to use its historical record as the basis for all equity investment in the future strikes me as wrong headed.