I agree it's time to revise expectations about performance, but not with a "sky's the limit" approach. There are going to be some pretty definite limits on returns, and that's going to require investors to rethink their portfolio strategy.

As my yardstick, I'm using some S&P 500 forecasts from John Bogle, founder and former CEO of mutual fund house Vanguard Group.

Full disclosure: Bogle wrote the foreword to my book, It's Earnings That Count. Fuller disclosure: I've seen Vanguard funds give desired results.

A few years ago, when I was treasurer of a foundation, I persuaded my colleagues to move our endowment out of a high-cost, poor-performing mutual fund and into a few Vanguard index funds. Costs play a big role in determining investment returns, and Vanguard is known for being zealous about paring fees to the bone.

When I revisited the foundation's allocations not long ago, I warned the board that while the equity portion of the account had generated double-digit returns over the last few years, future returns should average about 7% a year (nominally, not adjusted for inflation), if history is any guide.

That's a pretty big guide-down, to put it in earnings season-speak.

The Bogle Total Return Forecast

I base my lowered expectations on Bogle's work on equity returns over long periods, which he says -- again, this is for the long term -- are equal to the sum of three factors:

1. the initial dividend yield
2. the ensuing growth rate in earnings
3. any changes in the price-to-earnings ratio.