"Stock-price increases fueled expectations of further growth, until by 1999, a Securities Industry Association survey showed that investors expected to earn an annual rate of return of 30 percent. In other words, they expected that by 2010, stock prices would have skyrocketed. ... A survey done by ING Direct in March of this year found that, even after a decade of lousy returns and a spectacular market crash, more than a quarter of Americans expect annual returns in the stock market to average 10 to 20 percent. ... But if the return is 2 to 3 percent, you’ll need to save close to 40 percent to replace almost half of your income. And a 2 percent return seems to be a real possibility—in fact, it’s a hair above the 1.8 percent that Smithers & Co., an asset-allocation consultancy, forecast for U.S. equities over the next decade." - Paul Buchheit from Bookmarklet

gmo.com's 7yr forecasts for international and emerging equities are much better (4.9% and 6.6% respectively, vs 2.9% for US large cap). Ironically they expect "US high quality stocks" to have the highest returns, at 7.3%, and also for most bond asset classes to do far worse than equity! - Private Sanjeev