For Stocks, the Future Ain’t What It Used to Be
A facts-only brief, written by a local AI model from this article in The Wall Street Journal, October 13, 2026. It may contain mistakes, and it is not the article: the full story is at wsj.com.
An opinion essay argues that while historical stock market data suggests strong long-term returns, future gains may be lower because modern markets have eliminated many of the risks that previously compensated investors. The author contends that past high returns were partly driven by high trading costs, expensive mutual fund fees, and regulatory asymmetries that no longer exist. He cites investment researcher Andrew Ang’s estimate that federal taxes reduced the long-term annualized return on stocks from over 10% to 7%. The piece also notes that pre-1997 trading in eighth-of-a-cent increments created artificial returns through bid-ask bounces, a phenomenon that is now immaterial due to penny pricing.
Background
- A new book from the CFA Institute research foundation, “Exponential Wealth,” features a chart of historical stock returns that financial planners have long used to encourage equity investment.
- Before the SEC imposed Regulation FD in 2000, companies could selectively disclose material information to certain individuals, creating an uneven playing field for investors.
- Mutual fund sales loads typically ranged from 5% to 8% upfront, with annual management fees between 0.5% and 2%, making diversified investing costly for most individuals.
- Warren Buffett warned that judging future prospects based on lifetime averages is a mistake, comparing it to evaluating a 42-year-old center fielder by his career batting average.
Read the full article at wsj.com
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