The rate of economic growth has little relation to the stock market yield. For one you have forgotten about the dividends, currently around 2%. Now lets assume the company grows by 3%, so your shares will now be worth 3% more. But the total return will actually be 5%.
However here I assumed that there was no drop in optimism, or pessimism over the one year period. For if you were to bought in when expectations were high, your actual return would be lower.
Sometime the relation between growth and return is completely paradoxical. You would expect that in the past 100 years a portofolio invested in UK stocks to be dominated by one of US stocks. After all the first country went from being The Global Superpower to dubious second rate global player, meanwhile the US had done the same in reverse. Yet an investor in UK stocks would have been marginally better of.
Likewise you would expect China with its spectacular growth, to have brought impressive returns compared to the US. Yet that had not happened.
However here I assumed that there was no drop in optimism, or pessimism over the one year period. For if you were to bought in when expectations were high, your actual return would be lower.
Sometime the relation between growth and return is completely paradoxical. You would expect that in the past 100 years a portofolio invested in UK stocks to be dominated by one of US stocks. After all the first country went from being The Global Superpower to dubious second rate global player, meanwhile the US had done the same in reverse. Yet an investor in UK stocks would have been marginally better of.
Likewise you would expect China with its spectacular growth, to have brought impressive returns compared to the US. Yet that had not happened.