BERWYN, Pa.--()--Although the stock market’s performance since 2000 has been generally lackluster and left a bad taste in investors’ mouths, the pessimism currently surrounding stocks may be unwarranted. According to the latest position paper from Turner Investments, stocks have historically been, and should continue to be, the best wealth generators in the long run.
“stocks should resume their usual solidly positive performance, rising toward annualized returns that may reach the high single digits at the very least.”
Turner, an employee-owned investment firm based in Berwyn, Pennsylvania, publishes position papers quarterly that present the firm’s viewpoint on investment-related topics.
Titled Why we believe stocks should remain a rewarding asset class over time, the paper was written by Bob Turner, chairman and chief investment officer. In the paper, Mr. Turner points out that in the period covering roughly the past 13 years, from January 2000 to November 2012 – a time he calls “the Unlucky 13 Era” – the S&P 500 Index, a widely followed benchmark of the stock market, has returned a “woeful” 1.6% annualized. But he believes that era is an anomaly and that “stocks should resume their usual solidly positive performance, rising toward annualized returns that may reach the high single digits at the very least.”
The paper lists six reasons why, compared to other asset classes, Turner Investments believes stocks have the potential to continue rewarding investors:
- Stocks have an 86-year long history of outperformance over other asset classes.
- Stocks come with volatility risk, but other assets also carry risk – especially inflation risk, which stocks have historically provided a margin of safety against.
- Stocks are affordable relative to past valuations and bonds.
- Historically, after periods of underperformance, stocks revert to the mean and provide improved results.
- Stocks may stand to benefit from a favorable economic outlook.
- Demographic shifts in the United States related to baby boomers and the millennial generation could power stocks higher in the years ahead.
To read this fourth-quarter 2012 position paper in its entirety, see the Turner Investments Web site http://www.turnerinvestments.com/turner-position-papers/. Or call 484.329.2407 for a free copy of the paper.
The views, opinions, and content presented are for informational purposes only. They are not intended to reflect a current or past recommendation, investment, legal, tax, or accounting advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. Except as otherwise specified, any companies, sectors, securities, and/or markets discussed are solely for illustrative purposes regarding economic trends and conditions or investment process and may or may not be held by Turner, the Turner Funds, or other investment vehicles or accounts managed by Turner or its affiliates. Past performance is no guarantee of future results.
Turner Investments refers to Turner Investments, L. P., its subsidiaries, and affiliates. Nothing presented should be considered to be an offer to provide any Turner product or service in any jurisdiction that would be unlawful under the securities laws of that jurisdiction.
Turner Investments, founded in 1990, is an investment firm based in Berwyn, Pennsylvania. As of September 30, 2012, we managed more than $11 billion in stocks in separately managed accounts and mutual funds for institutions and individuals.
The S&P 500 Index is widely employed as a measure of the general level of stock prices and tracks the performance of 500 widely held large-cap U.S. stocks in the industrial, transportation, utility, and financial sectors. Investors cannot invest directly in an index. Such an unmanaged index reflects no management fees and transaction costs that are associated with some investments.