This article discusses emphasis on quarterly, rather than long-term, earnings. This is one of the biggest changes at my employer in my career. Managers used to be focused on technical aspects of projects and developing people, and now they spend a lot of time managing quarterly finances. (Cash flow is not an issue at the company.)
My favorite fact was one I’ve tried to find unsuccessfully in the past: 8% of stocks were held by institutional shareholders in 1950 compared to 70% of stocks today. I don’t know how 401(k) accounts are considered in that allocation, but pension funds will definitely have their returns affected by any increase in corporate taxes.
Despite the emphasis on profitability, the S&P including reinvested dividends has had historically moderate growth for the past couple decades. Since I opened a 401(k) in ~December 1998, the S&P (with dividends reinvested) has increased by 3.0% annually after inflation. Is there any agreement on the long-term expectation and whether this is expected to be typical? I’ve long been skeptical of the graphs by financial planners, but I’m 20 years into my career and I’m even more skeptical. Or am I missing something?
S&P 500 Return Calculator, with Dividend Reinvestment