``On a valuation basis, the long-term and full-cycle prospects for the equity market are awful. A 40-55% collapse over the completion of this cycle would be merely run-of-the-mill, as would zero nominal total returns over the coming decade (which would leave the S&P 500 Index itself at a lower level than it is today). There will undoubtedly be long periods of outstanding investment opportunity in coming market cycles, but recognize how extreme valuations are at present. The fact is that a secular low like 1949 or 1982, even twenty-five years from today, would be associated with S&P 500 nominal total returns averaging just 4% annually over that horizon, even on the optimistic assumption of 5% annual nominal economic growth over the same period (this is just arithmetic - see, for example, Ockham's Razor and the Market Cycle). All of that gain would be from dividends. ''

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