The end of the era of high returns in US stocks? Analysts warn: future 10-year return rate only 3%

Lance Roberts, chief investment strategy officer of RIA Advisors, said in an article on the 25th that in the next ten years, U.S. stocks may face the risk of recession, and use a number of indicators for comprehensive analysis, through chart data to find evidence of imminent recession. When did the biggest bubble in U.S. stock history burst? Analyst: Not afraid of recession, the real fatal is the Japan-US Intrerest Rate difference) (background addition: Buffett's indicator touches 200%!) Citi warns: U.S. stock flash crash may appear at any time, LONGS is too optimistic: As the world's largest economy, the U.S. stock market has continued to rise for more than a decade, and the upward trend has become more pronounced in recent years. Many people believe that the recent cycle of interest rate cuts in the United States, the US election and other Favourable Information factors will continue to accelerate the rise of the US stock market. However, Lance Roberts, chief investment strategy officer of investment advisory company RIA Advisors, said in an article released on the 25th that according to the warning reports of many institutions, the annualized return of the US stock market may only be 3% in the next decade. The golden age of U.S. stocks is about to disappear? To determine whether U.S. stocks are facing a recession, Roberts first explores stock market returns over the years. He noted that U.S. equity returns have risen significantly since 2008, and many investors may have become accustomed to a high-return investment environment: The chart below shows the average annualized, inflation-adjusted total return (including dividends) since 1928, according to Aswath Damodaran, a professor at New York University's Stern School of Business. The chart shows that from 1928 to 2023, the market's inflation-adjusted return is 8.45%. However, since the 2008 financial crisis, returns have jumped by nearly four percentage points across periods. While U.S. stocks have consistently delivered high returns to investors for more than a decade, leading to these high returns being taken for granted, the reality may not be the case. In addition, Roberts cites JPMorgan's report: According to investment bank models, the average calendar year return of the S&P 500 could fall to 5.7%, which is about half the level since World War II. This means that millennials and Gen Z may not be able to fill their retirement accounts with the same handsomeness from the U.S. stock market as their parents and grandparents. Are we in the stock market bubble zone? And the conclusions of JPMorgan's report have Roberts worried about whether the U.S. stock market is about to recession. Roberts first looked at stock market valuations, saying: Valuations are important in the long run. Historically, for a decade or more, future returns tend to be lower when stock prices are higher relative to earnings. Metrics such as P/E or P/E are often used to measure such metrics. Conversely, when valuations are low, future returns tend to be higher. It is clear from the chart below that the current valuation of the US stock market is higher than the historical average, and this high valuation reflects both market optimism and may be a warning signal. If the market pricing is too optimistic, any wind and grass could trigger a sharp pullback. Forward 10-Year Real Returns and Valuations End of the era of monetary easing The article goes on to say that over the past decade, the Fed and Central Bank have continued to promote extremely loose monetary policies, with near-zero Intrerest Rate and quantitative easing, which not only drops borrowing costs, but also stimulates investors' risk tolerance, which in turn drives up stock market activity. However, the goal of fighting inflation in the past 2 years has forced Central Bank to tighten its monetary policy. While the Fed has been tapering its balance sheet, government spending, such as the Inflation Reduction Act and the CHIP Act, continues to provide strong support for economic growth and corporate earnings. On the other hand, while the Fed has started cutting interest rates, it has made it clear that the Federal Fund Intrerest Rate is unlikely to return to zero. Therefore, if Central Bank continues to maintain a high Intrerest Rate environment and continues to shrink its balance sheet, the once "easy profitable" environment will change dramatically, which will undoubtedly put pressure on future investment returns. Government intervention vs stock market Will it be different this time? However, from historical data to predict future development, there will certainly be investors who say: "This time Bull Market is different", but Roberts said that there is no indicator to support this optimistic statement. But he also said that the article is not a prediction that the next "financial crisis" is coming, and what Roberts wants to say is that according to a combination of indicators, the future Return on Investment may be relatively lower compared to the stock market boom experienced in the past 8 years, especially as the Fed and Central Bank begin to withdraw from market intervention. Roberts also said that the market is still likely to meet the Bull Market again in the next decade, but most of the time, earnings may be swallowed up by the coming recession and market correction. Related reports BTC "N-type big vertical walk" long and short double explosion! ASML earnings report far below expectations, U.S. stocks tumble NVIDIA down more than 4.5%... BTCMiner single-handedly mined 3.3 BTC! 4 miracles have occurred in the "lotto miner" since July? Comment» U.S. stocks rise, why is BTC so weak recently? 〈The end of the era of high returns in U.S. stocks? Analysts warn: the return rate in the next decade is only 3%" This article was first published in BlockTempo's "Dynamic Trend - The Most Influential Block Chain News Media".