Bridge over ocean
1 January 2010 Financial Analysts Journal Volume 66, Issue 1

Economic Growth and Equity Investing

  1. Bradford Cornell

The performance of equity investments is inextricably linked to economic growth. Nonetheless, few studies on investing have explicitly taken research on economic growth into account. This study bridges that gap by examining the implications for equity investing of both theoretical models and empirical results from growth theory. The study concludes that over the long run, investors should anticipate real returns on common stock to average no more than about 4 percent.

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