Motley Fool Money Stocks for the Long Run
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Feb 4, 2023 Join Jeremy Schwartz, Global Chief Investment Officer at WisdomTree and co-author of 'Stocks for the Long Run', as he dives into the surprising triumph of dying industrial companies over the broader market. He discusses the implications of managing cash in today’s high-interest climate and emphasizes the importance of regular portfolio rebalancing. Schwartz also critiques the Federal Reserve's misinterpretation of economic data, urging for a fresh look at monetary policies to align with current realities.
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Stock Market Returns
- Stocks have historically provided a 6.7% to 7% real return after inflation.
- This return is linked to the market's price-to-earnings (P/E) ratio, similar to how bond yields predict returns.
Dying Industrials Outperform
- The original Dow Jones stocks from 1896, mostly industrial companies, outperformed the market.
- This demonstrates that "dying" sectors can still hold value and outperform newer sectors.
Long-Term Stock Advantage
- The longer the investment timeframe, the higher the probability of stocks outperforming bonds.
- A 30-year timeframe shows stocks beating bonds 99% of the time, showcasing the long-run advantage of equities.
