Since the financial crisis of 2008–09, the American economy has struggled to grow at just 2%/year. Yes, there has been an extended stock bull market, but the bull must inevitably lose its vigor unless economic growth accelerates significantly.

With the stock market climbing sharply immediately following Donald Trump's election as our nation's 45th president, there are some betting that the Trump presidency will result in such an acceleration. We won't know whether such forecasts prove accurate, and to what degree, for some time. Stock market returns over the past seven or eight years admittedly look great, but that's due largely to the bounce‐back in prices following the devastating collapse of 2008–09. A look at the stock market over a more extended time frame presents a more sobering picture. Factoring in all the ups and downs, from January 1, 2000 to January 1, 2017, the S&P 500 index grew just 2.7%/year. Add dividends paid by the S&P 500, which have averaged around 2% annually, and you're looking at an average annual return of slightly below 5% over that period.

Moreover, the rise in stock prices to historical highs has been helped in recent years by the near‐zero interest rate environment, which has forced investors to turn disproportionately to stocks for any hope of decent returns. Therefore, even if economic growth accelerates, let's say to a 4% rate, the likely accompanying rise in interest rates to more normal levels should temper further prospective ...

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