Stocks Long Term Growth {Part I}

From The Big Picture.  Interesting insights into long term growth rate of stocks:

The {above pictured chart} shows the long term growth of the US stock market, using a smoothed exponential trendline....a few things stand out....

• Mean Reversion cannot be denied;

• Growth Rates over very long periods of time are remarkably consistent;

• This consistency is likely controlled by a combination of numerous inputs, e.g., specific factors such as GDP, Population growth, Earnings, Interest rates, etc.;

• Stocks can remain above or below “Fair Value” for extended periods of time;• Reversion to the trend rarely occurs through sideways market action;

• Markets careen through their historical trend lines to levels far below and far above what seems “normal.”

Note that these are not the sort of charts that lead to an immediate trading decision; rather, they should color your long term expectations as what might occur in the intermediate future.

*Long ETFs related to the S&P 500 in client accounts.

Link:  Long-term-stock-market-growth-1871-2010/