Positive Expected Returns
“What’s the stock market going to do?” If you have read our past newsletters, you know that we are not market prognosticators. It is difficult for anyone to predict future market movements with any accuracy or consistency, and we make no attempt to do so in our approach to portfolio management. Nevertheless, academic theory suggests that the expected return in the market is always positive. How can this be? An investor who is completely risk-averse will invest solely in U.S.