Where Are We with Market Valuations? What Can We Expect now?

GuruFocus News

It is Oct. of 2008, Dow is hovering at around 9,000, about where it was 10 years ago. S&P 500 is about 10% lower. If you have been investing an S&P500 index fund, you are losing money even if you have been doing dollar cost average. Where are we with market valuations? What kind of return can we expect from the general market over the next decade?

In his Oct. 16 article on New York Times, Warren Buffett wrote. “Equities will almost certainly outperform cash over the next decade, probably by a substantial degree.” He is much more bullish about stocks now. What are the factors that make Buffett more bullish? What returns does he mean by “a substantial degree”?

Before we can answer the question, let’s review what Warren Buffett said before and how he come up with the numbers.

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