Is it reasonable to assume that strong earnings growth and price-to-earnings ratio (P/E) expansion will sustain the unusually strong U.S. stock market returns of the past decade? In his brief September 2025 paper entitled "Expected Stock Returns in Bullish Times", Javier Estrada decomposes stock returns into: (1) dividend yield, (2) change in earnings and (3) change in P/E. He then employs this decomposition to compare the bullish environments at the end of the 1990s with that of the summer of 2025, including an outlook for the next decade. Using Robert Shiller's prices, earnings and dividends for the S&P Composite Index during 1872 through June 2025, he finds that:
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