Is the 7 Percent Return for Stocks Extinct?

Some investors fear a new, austere normal.

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"Yeah, this time is different," says Matson. "It's not as bad."

Of course, what the market does is one thing, and what investors do is another. If you expect to match the market, you need to stay invested through thick and thin, something many investors can't stomach. Short on discipline and long on fear, active retail investors tend to get in and out of stocks at exactly the wrong moment, which is why they consistently underperform the market by about four percentage points a year, according to Dalbar, Inc., a Boston-based market-research firm whose annual report on investor behavior is a must-read for many financial advisers.

Jeff Layman, chief investment officer at BKD Wealth Advisors in Springfield, Mo., thinks a nominal 7 percent return is "very achievable" even if U.S. growth remains sluggish. That's going by what Layman calls a "simple, baseline model" which assumes a 2-percent dividend, 2-percent inflation, and steady stock prices, as measured by the S&P's price-to-earnings ratio, currently about 13.5 on expected 2012 earnings. "You're left with needing just 3 percent earnings growth, if you hold the PE multiple steady, to get to 7 percent earnings growth" before inflation, which would be something like 5 percent after inflation.

And as for a real 7 percent return longer-term? "I think it's very reasonable," says Layman. "The typical investor on the street is very skeptical about that, but that's another great contrarian reason why it'll probably happen."