Standard & Poor’s after World War II

So what should that be? The compound annual rate of return
for stocks from 1946 through 2006 is 11.5 percent, with the after-
inflation or real return at 7.2 percent. So investors may be
faced not with just half the returns from the 1990s stock bubble,
but less than half.
Another reason for thinking stock market returns will be
lower is the valuation of the equity market. Stocks in the closely
watched S&P 500 stock index are still a little expensive historically,
even after the collapse that began in 2000. As of the end of
Returning to the historic pace of stock returns means a big decline from the
pace of the 1990s. Total returns and real total returns, adjusted for inflation,
at compound annual rates.
Source: Ibbotson Associates. Data from Standard & Poor’s.
2006, the price-to-earnings ratio for the S&P 500 stock index
was 17.4, according to Standard & Poor’s. That is above the P/E
average of 16.1 since World War II, although it is well below its
peak of 46.5 for 2001.