PT  - JOURNAL ARTICLE
AU  - Charles P. Jones
AU  - Jack W. Wilson
TI  - Expectations about Real Returns
AID  - 10.3905/jpm.1999.319731
DP  - 1999 Jan 31
TA  - The Journal of Portfolio Management
PG  - 45--52
VI  - 25
IP  - 2
4099  - https://pm-research.com/content/25/2/45.short
4100  - https://pm-research.com/content/25/2/45.full
AB  - In this article, the authors provide empirical evidence concerning real returns for stocks and bonds in order to consider their impact on spending rules for large portfolios. Their analysis of the data supports the argument that 5% (or higher) real returns are not sustainable in the long run. Therefore, an endowment fund that is invested in equities, spends 5% a year, and earns the real return on stocks will, in all likelihood, see its market value decline below the beginning value at some point, absent new contributions. The actual record, shown in the article from probability standpoint, could lead institutional investors in particular to reformulate their expectations about real returns, and may also influence individual investors' expectations about future real returns.