It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]
FYI when playing the markets or “forecasting” too often people get fixated
on the past financial performance figures because they expect the same
going forward, this is known as the “Gambler’s Fallacy” or the “Fallacy of
the Maturity of Chances” and why the SEC mandates investor warnings
(note this idea also applies to real estate prices)
I don’t think the Gambler’s Fallacy applies in this case. Historical average of 10 or current average of 7 percent return is what one should expect over the long term.
