Seeking Alpha

Robert Christopher's  Instablog

Robert Christopher
Send Message
Hey: I'm looking to hook up with a Hedge Fund(s) as a consultant. If you're a Hedge Fund who could use my talents as a stock analyst or would like some research done on various stocks, then I may just be exactly the person you need. Please contact me at: Robert Christopher rchristo@vt.edu... More
My company:
Robert Christopher
My blog:
Ricks Cabaret International - Time to take it all off!
  • What Do I Believe The S&P 500 (SPY) Returns Will Be In The Future? 0 comments
    Sep 13, 2013 11:00 AM | about stocks: SPY

    Ok, here it is: I believe that the Standard & Poors 500 Index will deliver total returns on average of about 13% per annum for the next ten years. This would be an educated wild guess, but the 13% would allow for an estimated 8% for a market risk premium (part of your return on the stock market to allow for the risk of the overall market) and a risk-free component, estimated at about 5%. The risk-free component could break down to allow for about 3% projected inflation, plus approximately 2% to allow for real growth in the economy.

    I base these estimates on relatively strong returns on the S&P 500 Index over the last five years, with the realization that the US carries a historically large National Debt. It doesn't take a rocket scientist to consider at least modest inflation in overall price levels to be a likely scenario.

    I look at the next twelve months as essentially three scenarios, with the following probabilities. I think there's about a 30% chance that the S&P 500 Index will deliver a total return of at least 25% in the next twelve months, a 50% chance of a return of at least 10% and a chance of 20% of a total loss at least as bad as negative 25%. These are wild guesses that sum up to an expected estimate of 7.5% for the next twelve months for the S&P 500 Index.

    It goes like this: If the US faces an unexpected military obligation in the Middle East, then I believe the S&P 500 Index (the market) would likely go down. I think most likely, however, the market should generate my estimate of about a 10% total return, or about the same as it has done per year for the last 75 years. If we find that we are generally relieved of worries about Syria, I could see the economy begin to gather more steam, and a vibrant economy could perhaps spur the market to advance another estimated 25% or so.

    Disclosure: I am long SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Disclosure: I am long SPY.

    Themes: S P 500 Index Stocks: SPY
Back To Robert Christopher's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.