I think there's a decent chance that the stock market will crash in the next year or two — maybe dropping 30% or more.
Even without a crash, I think it's likely that stocks will deliver poor returns from today's level over the next 10 years. Not negative returns, mind you, but poor returns — average annual returns (including dividends) of only about 3% per year.
Given that stocks are usually expected to return about 10% per year, that's pretty crappy.
It's not crappy enough that I'm dumping my stocks. I expect bonds and cash to deliver lousy returns over the next 10 years, too — maybe even worse than stocks. And I'm scared we'll eventually get some rapid inflation, which stocks should provide some protection from (unlike bonds and cash). But I'm not expecting the double-digit gains we've had from stocks over the last few years to continue much longer.
Why not?
Two reasons:
1) Stocks are expensive relative to earnings.
2) Earnings are much higher than normal.
Over the next 10 years, I expect
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