The U.S. stock market could deliver significantly weaker returns over the next 10 years, according to Aman Alimbayev, an economist and former analyst at the Kazakhstan Stock Exchange (KASE).
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As an example, Alimbayev cited the distribution of 10-year U.S. stock market returns from 1880 to 2026, based on data from economist Robert Shiller and Goldman Sachs analysts.
He noted that the average annual return of the U.S. market over the past 146 years has been approximately 9.3%. However, the most recent decade has been significantly stronger than historical norms, with average annual returns reaching 12.8%.
Expectations for the next decade
According to Alimbayev, the widespread belief that equities reliably generate consistent long-term gains is not supported by historical data. He estimated that investors can experience negative returns in roughly 5% of 10-year periods, even over a decade-long horizon.
Against the backdrop of elevated market valuations, Goldman Sachs analysts project average annual nominal returns for U.S. equities of around 5.8% from 2026 to 2036. This would be well below historical averages.
Portfolio Implications for Investors
Alimbayev believes that in this environment, investors should reassess their portfolio allocations rather than relying exclusively on the S&P 500.
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He noted that periods of market overheating have historically created opportunities in international equities and small-cap stocks.
He also emphasized the importance of bonds in a diversified portfolio. With expected equity returns of 5.8%, high-quality U.S. and international government and corporate bonds may offer competitive risk-adjusted returns.
Dollar-cost averaging strategy
Finally, Alimbayev highlighted the value of dollar-cost averaging (DCA), a strategy involving regular, systematic investments regardless of market conditions.
He said that if the U.S. market experiences weaker growth or a prolonged sideways trend in the coming years, consistent investing could help smooth entry points and reduce the impact of short-term volatility over time.
