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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01
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To: James Strauss who wrote (11536)8/26/2002 9:04:03 PM
From: j g cordes  Read Replies (1) of 13094
 
Jim re ".. over the past 100 years the stock market has delivered 9% to 10% average annual returns..."

That's a quote I've seen many times and its very misleading. The statistic is usually derived by looking at the S&P 500 or the Dow average. As we know, those averages are adjusted continuously to add up-and-coming companies and to delete those that are failing.

Second, within those years the indexes were averaged, there were long periods of low or no growth. The historical avg PE between 1920 and 2000 was 14. We're still well over that even after the burst bubble correction we seem to be working our way out of.

Third, its evident that much of the 90's was due to globalization of US interests as a result of "winning" the cold war. It was much like the 1950's post-war reconstruction boom. We've benefited tremendously by taking the lead in all geographies with the implied if not actual support of an uncontested military potential.

I'd contend that this era of global expansion had a fast growth agressive phase which has slowed. Will it once again move as quickly to uniquely benefit US corporate wealth? Who can say.. the odds would seem to favor EU and Asian strengths gaining some ground.

Last, one must subtract out inflation. After inflation the numbers look different still.

This isn't to say there won't be fabulous sector and individual stock investment opportunities.. there will be.
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