Expect The S&P 500 To Underperform Risk-Free T-Bills Over The Coming 10-12 Years

Last week, Treasury bill yields rose to 0.75% following the Federal Reserve’s quarter-point hike in the target Federal Funds rate, placing the yield on even risk-free liquidity above our 0.6% estimate for 12-year prospective S&P 500 annual total returns. This isn’t the first time in history that prospective 12-year stock market returns have fallen below the prevailing T-bill yield, but it’s certainly the lowest return that has prevailed at any of those points. We should distinguish those points, in and of themselves, from market peaks. For example, in...

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