Newsletter September 10, 2006
InvestorsFriend Inc. Newsletter September 10, 2006
What return can you expect to make by investing in the broad North American stock market indexes today?
In this edition of our newsletter, I explore that topic in full detail.
I have just finished well over 10 hours of analysis on this topic. And that analysis made use of valuable data that I have collected over the years. This analysis has increased my own understanding of the longer-term average annual returns that I expect from the stock market indexes (like the TSX index and the Dow Jones Industrial Average Index). I am very pleased to bring you all of this analysis free of charge. I am very confident that it will be worth your time to read the following.
Warren Buffett has pointed out that in the long run we should expect the average return from stocks to approximate the “real” growth in Gross Domestic Product, plus inflation, plus the dividend yield.
If true, it is easy to calculate that we should now expect the stock market indexes to rise by an average of perhaps 6% to 8% annually (although with lots of volatility around that figure including some losing years).
In a series of short articles I have analyzed data going back to 1929 that demonstrates that Warren Buffett is indeed correct (no surprise there).
Many people make opinions about stock market returns. But extremely few of them can show you the kind of analysis I have provided here.
Warren’s long term relationship will work best if we are starting out with a neutral market (one that is neither over-valued nor under-valued). I have also done detailed analysis which concludes that today’s stock markets appear to be about fairly or neutrally valued.
I sincerely believe that this analysis will greatly increase your understanding of what average return to expects from stock market indexes in the long run and exactly why you should expect that long run return.
These valuable articles can be viewed at:
For those in a hurry, check the summary article at:
(There are some extremely interesting graphs in this short article)
Beating the Market Averages:
For many of you, a 6% to 8% return on the stock market index may not seem too appealing.
As you may be aware, the stock picks on our Site have beaten the market averages quite handily for each of the past six years. Therefore based on the depth of analysis that you see on this Site and based on the track record, you may wish to become a subscriber to our stock picks, if you are not already a subscriber. Right now is a great time to subscribe and see our current stock ratings as we head towards the end of the year.
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