Kopcke, Richard W., and Dan Muldoon. “Why are stocks so risky?”. Issue in Brief 9-23, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, November 2009. http://hdl.handle.net/2345/bc-ir:104282.
The brief's key findings are: (1) Stocks have diverged from historic averages for periods of 10 to 20 years. (2) This divergence reflects fluctuations in: 1) corporate earnings; and 2) investors' assessments of those earnings. (3) Corporate earnings vary, but tend to stabilize and return to long-term economic trends within a few years. (4) In contrast, investors' valuations have been more volatile, taking decades to fully stabilize.