In my article two weeks ago, I highlighted a reason for optimism for the stock market related to the very high levels of insider buying by corporate executives since the start of the recent correction. For those who didn't read that article, the implication of high levels of insider buying is generally higher prices in the future. Obviously, these insiders wouldn't be buying a lot of additional stock if they thought that prices were going to continue much lower or that their company's survival was in question.

Recently, another potential reason for equity investors not to lose hope came to light, with this one being based on a more subjective opinion, but nonetheless based on a very long-term historical view. Professor Richard Sylla, a financial historian at New York University, accurately predicted the last decade of sub-par results for stock prices in the year 2000, but now says the next decade will be much better for those with patience to put up with the current volatility, which may last a while longer.

Sylla has studied financial market patterns back to 1790 – over 220 years of history. The focus of his work is not to predict market movements over any short period of time, but rather what type of returns investors should expect over the next decade.

In the year 2000, after the heady, way above average returns of the 1990s Sylla's analysis revealed very poor prospects for the returns to be realized by investors in stocks over the next 10 years. We all know how right he was with the benefit of hindsight and having lived through a decade where two major bear markets took place, each of which resulted in declines in excess of 40 percent for the S&P 500 Index.

We now call 2000-2010 the "Dead Decade" for stocks, one of the infrequent 10-year periods where returns for investors in stocks were essentially zero. The good news, despite the very low opinion of equity investing by the average investor, is that in the big picture of historical mega-trends, the very low periods of performance give way to better days (and vice versa).

Now, for the good news. Sylla's analysis shows that the remainder of the decade between now and 2020 should provide average annual returns for stock indexes close to the normal long-term average of about 6 to 7 percent inflation adjusted or about 9 to 10 percent before inflation. Returns of this level would take the Dow Jones industrial Average to over 20,000, an 80+ percent increase. He also believes the S&P 500 Index could grow to a level of 2300 from the current level of about 1150 – a doubling for that benchmark.

Sylla is the first one to caution that his work is not intended to predict market action of the next few months or the next year. In fact, he thinks the market could possible go lower in the near-term future as politicians in the U.S. and Europe struggle with solutions to fiscal and debt issues. His emphasis is to help investors have confidence in a long-term investment view and plan, but, of course, short-term news events will come and go over the next nine years and a lot of ups and downs will occur. Still, a sensible long-term forecast couched in an analysis of more than 220 years of the human fear and greed cycle may be worth paying attention.

To read an article highlighting additional details, I suggest performing a Google or other search engine search using the following key words: "Yahoo Long-term Case for stocks." The first link that comes up should take you to the article.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.