Lost Decade Ahead for Stocks With Only 3% Annual Returns?

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S&P 500 News

The Technology Select Sector SPDR® Fund,The Communication Services Select Sector SPDR® ET

Stocks Analysis by Ed Yardeni covering: S&P 500, The Technology Select Sector SPDR® Fund, The Communication Services Select Sector SPDR® ETF Fund. Read Ed Yardeni's latest article on Investing.com

will produce annualized returns of only 3% over the next 10 years. They reckon that the range of possible outcomes includes -1% at the low end and +7% nominal returns at the high end.

If the productivity growth boom continues through the end of the decade and into the 2030s, as we expect, the S&P 500's average annual return should at least match the 6%-7% achieved since the early 1990s . It should be more like 11% including reinvested dividends. These two sectors account for more than a third of the S&P 500's forward earnings today versus less than a quarter in 2000 . We also believe that all companies can be thought of as technology companies. Technology isn't just a sector in the stock market, but an increasingly important source of higher productivity growth, lower unit labor costs inflation, and higher profit margins for all companies.

 

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