[adios]

First of all I confess that my answer was intended to be provocative. Thanks for "calling" me on it. I've given the issue of the stock market's viability as an investment vehicle a lot of thought.

"So the stock market is a zero-sum game over any time horizon?"

No but to me it's unclear as to how substantial the equity risk premium really is. From what I can discern the historical data isn't all that meaningful in establishing what the mean historical equity risk premium has been within say a 95% confidence interval. I believe that over any twenty year period since 1926 the valuation of the market has increased and in any 10 year period there are very few losing periods. So to me very long holding periods do indicate investment potential i.e. the existence of an equity risk premium. As to the magnitude of the premium I don't know and it bothers me a lot. I believe the CAPM indicates a risk premium for stocks of almost zero. Also the S&P 500 itself has many deletions and additions so I'm not sure how good of gauge it really is for historical performance. What the data suggests to me is that prices can range over a wide and I mean really wide range which suggests to me that the "efficiency" of the market is probably overrated. Effecient in the long run, yes, in the short run, year to year and less, I don't think so.

"So this is what you expect going forward?"

Regarding the high quality bonds such as treasuries, they seem way over priced to me but who knows. I've seen a steady decline in interest rates over the last 20 years and I wonder if my opinion is tainted by the fact that the late 60's and 70's were extraordinary times for inflation. What I expect is that stocks will do just about as well as bonds say over the next 10 years.