Estimating Future Returns of the S&P 500

A few months ago, we posted a chart from Goldman Sachs that emphasized how remote the possibility of a 10% annual return for the next 10 years in the S&P 500 would be.

Recently, we found this chart from David Merkel at The Aleph Blog that forecasts future returns using a methodology of his own. Its average forecast is a 4-5% annual return for the next ten years.

4-5% annual return for S&P 500 is most likely result for next 10 years

Forecasts like these are not meant to predict exactly what the stock market will do in the years to come. Instead, they can act as a reality check for investors whose expectations for future capital gains may be too optimistic.

Source: David Merkel at The Aleph Blog