According to the seasoned Wall Street executive, investors should not expect the uptrend in stocks and other assets to remain as strong as it is today for years to come.
In the last four years, the S&P 500, the world’s most representative stock index that gathers today’s most relevant corporations, has grown about 20% per year. On the other hand, the Nasdaq 100, which focuses on technology companies, has appreciated by an average of 40% per year.
As can be seen, the market returns were extraordinary, to the point that many analysts and investors are beginning to question whether this is not a bubble that could end with a devastating collapse like in 2000 or 2008.
In this line, Solomon said: “It is to be expected that we are not going to see the same rate of return in equities and many other assets in the next few years that we have seen in the last two years”.
I don’t think double-digit compounded equity returns in perpetuity is something you should expect as an investor,” he added.
He noted that not only does he think this way, but so do a number of experts in the field: “I’ve been involved in a number of investment committees and charitable foundations, university boards, etc., and certainly my thinking is that the returns we’ve received over the last three to five years are different than what we should expect as we move forward,” he said.