Alypius Skinner wrote:
> The 7% long-term inflation-adjusted return on equity investments (composed
> of dividends plus capital gains) is only true for people who enter the
> market at very low P/E's and benefit from dramatic P/E "inflation."
How can that be? That 7% is an average over all owners of stock, not a
conditional return for people who bought at the right time.
(Incidentally, 7% sounds low relative to other averages I've heard.
Burton Malkiel cites a figure of 10% real pre-tax if I recall
correctly).
I don't think you suggested otherwise, but it's worth pointing out that
focusing on inflation-adjusted returns just makes the equity premium
more striking.
Question: Do you think that the flight from equity has really been more
substantial among older investors? I've seen no data, but I'd be
skeptical.
> ~Alypius Skinner
--
Prof. Bryan Caplan
Department of Economics George Mason University
http://www.bcaplan.com [EMAIL PROTECTED]
Mr. Banks: Will you be good enough to explain all this?!
Mary Poppins: First of all I would like to make one thing
perfectly clear.
Banks: Yes?
Poppins: I never explain *anything*.
*Mary Poppins*
