Brooks analyzes whether the exceptional 11.9% average annual excess returns of U.S. equities over cash during 2013–2023 can repeat over the next decade. Using a return decomposition framework, he shows that replicating such performance would require unusually high earnings growth and historically high valuation multiples—an implausible baseline scenario.
Driving with the Rear-View Mirror: Will we see a repeat of the past decade of U.S. equity returns?
AQR
Jordan Brooks
Research
14 Pages
Key Takeaways
Exceptional performance is rare: U.S. equities outpaced cash by ~11.9% annually from 2013 to 2023, a return level above the 90th percentile since 1950
Repeat requires heroic assumptions: Matching past returns would need 6%+ earnings growth and record-high valuation multiples—an unlikely combination
Prudent expectations matter: More realistic projections still imply valuation expansion, reinforcing the need for measured return assumptions
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