Now the Long Run Looks Riskier, Too By MARK HULBERT New York Times, March 28, 2009
The conventional answer has been, emphatically, yes. After all, despite downturns like the one we?ve endured recently, stocks over periods of 30 or more years have almost always outperformed other asset classes. And numerous studies have found that the stock market?s long-term returns have tended to fall within a surprisingly narrow range.
But those studies were based on the stock market?s past performance, which, famously, provides no guarantee of future performance. New research, using different statistical techniques aimed at capturing the uncertainty of future returns, suggests that the market may be much riskier than many investors have understood.
The new study, which began circulating last month as a working paper, is titled ?Are Stocks Really Less Volatile in the Long Run?? Its authors are Lubos Pastor, a finance professor at the University of Chicago Booth School of Business, and Robert F. Stambaugh, a finance professor at the Wharton School of the University of Pennsylvania. A copy is at
The many people who think stocks are "safe" if only your time horizon is long enough are wrong. They used to cite a 10-year period, but given recent experience 15-years now seems to be a favored number.