Reproduced with permission from The American Association of Individual Investors (www.aaii.com; 800-428-2244).
William Reichenstein, Baylor University, conducted the research for this article while a participant of the TIAA-CREF Institute Visiting Scholar Program.
In the past two years, several academic and professional scholars have concluded that long-run real stock returns will be below historical levels and that the equity risk premium — the additional return on stocks compared to Treasury bonds — will be either well below historical levels or negative.
This article summarizes these predictions, and discusses their implications for individual investors.
