U.S. Stocks Are Priced as If History Is Irrelevant

At a time when U.S. stocks have continued to outperform, clients and advisors sometimes ask us why we don’t allocate more to U.S. stocks. When we aggregate the three return components of stock returns in our base case, future five-year expected U.S. stock returns are less than one percent, annualized, and this is despite relatively generous margin and sales-growth assumptions.