{"id":323641,"date":"2010-02-15T13:18:08","date_gmt":"2010-02-15T18:18:08","guid":{"rendered":"tag:http:\/\/www.economist.com,2009:21004837"},"modified":"2010-02-15T13:18:08","modified_gmt":"2010-02-15T18:18:08","slug":"a-new-normal","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/323641","title":{"rendered":"A new normal"},"content":{"rendered":"<p>OVER the whole of the 20th century, equities were a pretty nice bet. But lately, they haven&#8217;t done so well relative to alternate investments. The Daily data point <a href=\"http:\/\/eiudatapoints.wordpress.com\/2010\/02\/15\/investment-returns-the-long-view\/\">reports<\/a>:<\/p>\n<blockquote>\n<p><img decoding=\"async\" class=\"mceItem\" src=\"http:\/\/eiudatapoints.files.wordpress.com\/2010\/02\/equity-risk-premium-02-15-10.gif?w=266&amp;h=284\" alt=\"\" align=\"right\">Since 1900, the equity risk premium\u2014the return achieved above treasury  bills\u2014has averaged 4.4% per year, the report claims. There are reasons  to believe that this long-term average overstates the prospects for  equities in the years to come, <a href=\"http:\/\/www.ft.com\/cms\/s\/0\/aae3087e-1806-11df-91d2-00144feab49a.html\" >the academics argue<\/a>, with a premium on the order of  3.25% a more realistic expectation in the future. Although whether  returns in the next 110 years will revert to their previous 110-year  average makes for interesting debate, it also brings to mind the famous  forecast of John Maynard Keynes: \u201cIn the long run, we are all dead.\u201d<\/p>\n<\/blockquote>\n<p>Note that returns from 1985 to 2009 were above the historical norm despite the fact that the premium on equities was negative during the last ten years. That suggests the return above Treasuries from 1985 to 1999 was extraordinarily high. Indeed, stocks rose some 800% over the period, in nominal terms. During the 15 years from 1970 to 1985, stocks rose about 80%. Very peculiar.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>OVER the whole of the 20th century, equities were a pretty nice bet. But lately, they haven&#8217;t done so well relative to alternate investments. The Daily data point reports: Since 1900, the equity risk premium\u2014the return achieved above treasury bills\u2014has averaged 4.4% per year, the report claims. There are reasons to believe that this long-term [&hellip;]<\/p>\n","protected":false},"author":4534,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-323641","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/323641","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4534"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=323641"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/323641\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=323641"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=323641"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=323641"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}