Searching For Lost Decades

Blake Lebaron ()

No 30, Working Papers from Brandeis University, Department of Economics and International Business School

Abstract: This paper estimates the probability of a ``lost decade'' where equity investments lose value over a ten year period. The findings are a reminder that equity investments are risky even over longer time periods, and investors should take this into consideration when making portfolio choices. It also introduces a simple method to allow the reader to combine beliefs about long run stock returns along with computer simulated return distributions. Finally, it is shown that mistaken perceptions of using arithmetic means could account for some common misconceptions about the chance of losses over a decade.

Pages: 19 pages
Date: 2010-06
New Economics Papers: this item is included in nep-rmg
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP30.pdf First version, 2010 (application/pdf)
http://www.brandeis.edu/economics/RePEc/brd/doc/Brandeis_WP30R.pdf Revised version, 2012 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:brd:wpaper:30

Access Statistics for this paper

More papers in Working Papers from Brandeis University, Department of Economics and International Business School Contact information at EDIRC.
Bibliographic data for series maintained by Andrea Luna ().