Where is the stock market headed?

Tuesday, November 21st, 2006
Categorized as: Savings Bonds and competitive investments

Given that stock prices have been up the last few months, it’s easy to assume they’ll continue in that direction for the foreseeable future. But some of the folks looking out the windshield see lower-than-expected performance over the next 10 years, particularly if inflation rises.

I’ve mentioned the weekly newsletter of John Mauldin here before in Should we worry about inflation?

In addition to his regular weekly newsletter, Mauldin publishes a weekly Outside the Box letter that has comments from other investment strategists. This week’s article is by Ed Easterling, author of Unexpected Returns: Understanding Secular Stock Market Cycles and President of an investment management firm.

In the article, Beyond The Horizon: Economics & EPS, Easterling uses the stock market’s historical earnings per share (EPS) and price to earnings ratios (PE), along with different inflation scenarios, to predict a range of performance for the stock market over the next 10 years.

A lot depends on future inflation rates, but if they’re high, Easterling’s analysis indicates that Series I Savings Bonds would outperform stocks over the next 10 years.

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on Savings-Bond-Advisor.com. I will contine to update the main articles on this site, but not the comments.

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Tom Adams

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