Stocks ain't hot, claim LBS researchers

In a paper titled 'Irrational Optimism' three London Business School (LBS) Professors have asserted that historically stocks have had lower returns and higher risks than was previously believed.

To quote "Although the probable rewards from equity investment are attractive, stocks did not and cannot offer a guaranteed superior performance over the investment horizon of most investors. Furthermore, their prospective returns are lower than many investors project, whereas their risk is higher than many investors appreciate."

"Investors who assume that favorable equity returns can be relied on in the long term or that stocks are safe so long as they are held for 20 years are optimists. Their optimism is irrational. "

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The paper can be downloaded from : - http://papers.ssrn.com/sol3/papers.cfm?abstract_id=476981