I'm not sure I agree with the analysis and reasoning, but I definitely think we're due for a decade or so more of mediocre equity performance, in addition to the lackluster decade we've had.
The bull market of the 1980s and '90s came from the entrance of middle-class Americans into the stock market. Before 1980, equities were considered risky (and were so, compared to bonds and annuities) and were seen as a "rich person's game", but this changed once people became educated about the "equity premium", which may no longer exist, and diversification. The influx of new investors allowed the markets to rally, rejuvenating Wall Street, an industry that had been fading up to that point.
Given the economic problems the U.S. currently faces, I think we're looking at a decade or more of mediocre equity performance. S&P/dollar isn't terrible, but S&P/euro is pathetic. The erosion of the U.S. middle class is a troubling sign, and I don't think we'll see the next bull market until this trend is reversed so decisively that a new middle class is being created. That point seems to be rather far off, in my estimation.
Before 1980, equities were considered risky (and were so, compared to bonds and annuities) and were seen as a "rich person's game", but this changed once people became educated about the "equity premium", which may no longer exist, and diversification.
That also happened in the 60's -- mutual funds, in particular the 'performance' funds, grew pretty fast. In the 20's, diversification wasn't popular, but stocks sure were. And even earlier than that, there were investment crazes that were fairly democratic. The widespread adoption of treasury bonds for individual investors in the 1860's was nothing like the mania for stocks in the late 1990's -- except to the extent that it was a larger mania than anyone up to that point had experienced.
So I don't think looking at the 80's and 90's as new and original is all that useful. It's a cycle.
Equity returns were pretty lousy during the height of the industrial revolution in the 19th century. Stock prices only loosely correlate to general growth. The 1950s were boom years with lousy returns, and stocks shut up during periods in the 80s and 90s when the economy wasn't fantastic by historical comparison.
Stocks just haven't been all that great a way to make money, historically.
I don't know about globally, but it looks like prices tripled during the 1950's in the US. And that's not counting dividends, which were a bit higher at the time. Or did you mean something else?
In fact, I seem to remember a William O'Neill book claiming that the 50's were more speculative than the 60's. He argued that if you just treat prices as earnings and some multiple, you can demonstrate that returns in the 1950's were mostly multiple expansion, and in the 60's they were mostly earnings growth.
The bull market of the 1980s and '90s came from the entrance of middle-class Americans into the stock market. Before 1980, equities were considered risky (and were so, compared to bonds and annuities) and were seen as a "rich person's game", but this changed once people became educated about the "equity premium", which may no longer exist, and diversification. The influx of new investors allowed the markets to rally, rejuvenating Wall Street, an industry that had been fading up to that point.
Given the economic problems the U.S. currently faces, I think we're looking at a decade or more of mediocre equity performance. S&P/dollar isn't terrible, but S&P/euro is pathetic. The erosion of the U.S. middle class is a troubling sign, and I don't think we'll see the next bull market until this trend is reversed so decisively that a new middle class is being created. That point seems to be rather far off, in my estimation.