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Global Stocks - Legacy of the Great Recession?

Bogleheads • View forum - Investing - Theory, News & General - www.bogleheads.org
Much has been written about the legacy of the Great Recession and how deep a hole the recession created in the global economy. Recessions associated with financial crises are thought to be deeper and take much longer to recover than normal recessions. Yet, defying global trends, the earnings of U.S. companies have grown 10% annually since 2009 (in green, chart below) — double their historical growth rate and three times the rate of U.S. GDP growth over the period:

Source: JPMorgan Chartbook, as of 5/31/17.Comparing global stock market performances since the Great Recession (chart below), stock prices worldwide have indeed followed the earnings growth rates of their respective asset classes — strong in the U.S., but lackluster in most other developed and emerging markets:

Source: Portfolio Visualizer Historical studies indicate that it has taken, on average, about 8 to 9 years for countries to recover from deep financial crises and to reach their pre-crisis levels of income and economic growth. With this in mind, the time may be near when international stocks, in both developed and emerging markets, begin to resume their pre-crisis earnings growth rates. Thoughts?
Date: Jun 19, 2017   


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