One reason for this belief is what economists call mean reversion,
which says that over time the return from the stock market
will revert to its historical trend. So if you have had a period
when market performance was well above its long-term trend—
like the 18.5 percent compound annual pace from 1982 through
1999 or the 28.6 percent run from 1995 through 1999—then a
period of subtrend growth is due. This means that returns should
move below their long-term average.
which says that over time the return from the stock market
will revert to its historical trend. So if you have had a period
when market performance was well above its long-term trend—
like the 18.5 percent compound annual pace from 1982 through
1999 or the 28.6 percent run from 1995 through 1999—then a
period of subtrend growth is due. This means that returns should
move below their long-term average.
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