The Next 100 Years

Over the last 100 years, the US equity market has returned about 9% annually. What will it return over the next 100 years?

Well, the index fund promoters say that history will repeat itself and that the next 100 years will look like the last 100 years, so you should go to and put all your money in the Vanguard Total Stock Market Index Fund (VTI).

I don’t believe this to be true.

Stocks are loosely correlated to corporate earnings, which are loosely correlated to economic growth. Economic growth has been gradually slowing over the last 100 years. I predict it will slow further.

Our Work Ethic Has Disappeared

Output is a function of hours worked, effort, and productivity. In the future, people will work fewer hours and won’t work as hard. I have a nose for social and cultural trends, and I know how hard people worked in 1999, and I know how hard people work today. There is no comparison.

Part of this is because of the pandemic, which served as some kind of psychological shock—people decided that they now value leisure more than output. There are places in the world where people traditionally value leisure more than output, like Europe, where stocks have returned zero over the last 15 years. The good news is that productivity continues apace—ChatGPT is a good example of that, a productivity miracle.