Beschreibung:
I survey the statistical evidence on average stock returns, and the economic theories that try to explain average stock returns. The statistical evidence suggests a period of low returns, followed by a slow reversion to a high long-term average return. However that evidence is quite uncertain. Standard economic models predict tiny average stock returns. I survey new economic models that predict high returns, but by fundamentally changing the description of stock market risk. I warn that a low forecast of stock returns does not necessarily imply that one should sell