Why Are Stocks So Risky?
November 10, 2009
The brief’s key findings are:
- Stocks have diverged from historic averages for periods of 10 to 20 years.
- This divergence reflects fluctuations in: 1) corporate earnings; and 2) investors’ assessments of those earnings.
- Corporate earnings vary, but tend to stabilize and return to long-term economic trends within a few years.
- In contrast, investors’ valuations have been more volatile, taking decades to fully stabilize.
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Citation
Muldoon, and Richard W. Kopcke. 2009. "Why Are Stocks So Risky?" Issue in Brief 9-23. Chestnut Hill, MA: Center for Retirement Research at Boston College.
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