Some optimism still seems appropriate regarding North America’s stock markets

A few years ago, we tried to forecast the returns of the main asset classes from 2013 to 2022. The U.S. stock market has wildly exceeded our expectations since then, recording annual growth of more than 15%, despite the lacklustre increase in profits. The last few years have been tougher for Canada’s stock market, pummelled by the drop in commodity prices. Now that the worst of the impact from the oil shock seems to be behind us, and given that price/earnings ratios could remain relatively high, North American stock markets still seem to be able to deliver attractive returns over the medium term, especially if compared with the bond market’s weak outlook.