Revisiting the Expected Return of the Stock Market

A few months ago I posted a short video, titled ‘The Most Important Number You Won’t Find in the Wall Street Journal,’ which described a simple way to forecast the long term expected real return of the stock market. The method consisted of adding together the ‘three easy pieces’ of 1) the market’s current dividend yield, plus, 2) expected real dividend growth, plus, 3) an adjustment for any forecast change in stock market valuation. At very long horizons, say 50 years, the adjustment for one’s expected…