>But, you say that it is *true* that the
>*average* 30-year "look back" return on the stock
>market is 6%, with wide variations. But then you later
>on question how anyone could expect that stock market
>(as a whole) to exceed in its returns the growth of the
>economy, i.e., if economic growth is 3%, so too ought
>to be the stock market's.
>
>But it seems to me that the *average* annual economic
>growth for the period you graphed is *lower* than 6%.
>In other words, the history you gave seems to indicate
>stock market returns have historically exceeded gnp
>growth.
The 6% percent figure is stock market *returns*. It's stock *prices* that can only grow as fast as the economy long-term, right? The growth of stock prices (capital gains) is only one part of stock returns, the other part being the dividend yield. So it makes sense for the return on stocks to be higher than than the growth rate, no? Or am I missing something?
Seth Ackerman