Chapter Seven
When the Good Times
No Longer Roll
-
What Happens If
Future Returns Are Lower?
REMEMBER THE UNFAILING principle described in
Chapter 2: in the long run it is the reality of business—the
dividend yields and earnings growth of corporations—that
drives the returns generated by the stock market. How-
ever, I must warn you that during the past 25 years—the
period examined in the three preceding chapters—the
12.5 percent nominal annual return provided by the U.S.
stock market included a speculative return of nearly 3
percent per year, far above the business reality

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