Stocks can produce multiple of GDP growth

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We learn in this class that the average returns for large-cap stocks have been around 9 or 10 percent. This is in a period where GDP growth has averaged 3 percent. How is this possible that stocks can produce a multiple of GDP growth?

If the “new normal” for GDP growth is 2% (or less) what would be your long-term average of future stocks returns? Why?

Reference no: EM131924159

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