In the two year period that is probably beyond the experience of 95 percent of all fund managers and their shareholders, daring investors lost about 60 percent of their purchasing power . Market timing kills you. Mr. Vinik learned this recently. While he remains fully invested, he told conference attendees that stocks were now so fully priced that they were likely return no more than 7 percent a year, the return on 10 year Treasury obligations. In a private interview, I asked how he came to that figure.
Yield is a very hard number.
Corporate earnings aren't always reliable but a dividend check is real money sent to shareholders. Yield is now around 2 percent. It has never, ever, been this low. Now let's assume it's the kind of number that should have some reversion properties. In September of 1987 it was about 37.