The Enron virus is working its way through the stock market. Investors are punishing any company with opaque financing or questionable accounting. It's not just jury-rigged companies like Tyco International and Global Crossing that are getting hammered but also such blue-chip stalwarts as IBM and General Electric. Management is getting the message. GE is the latest company to publically embrace greater financial openness by promising to provide investors with more detailed numbers about its 26 businesses than before.

The stock market will regain its footing as investors regain confidence in the quality of corporate earnings and as the economy strengthens. Still, equity investors are likely to be disappointed with the returns they'll earn over the next decade or so.

Corporate earnings closely track economic growth over the long haul. Economists at the Federal Reserve Board calculate that the U.S. economy can grow at a 3.5 percent pace without generating inflation. Adding that growth rate to the current dividend yield of 1.3 percent on stocks suggests a reasonable forecast for long-term stock returns is around 5 percent, after adjusting for inflation.

Of course, that's well below the nearly 13 percent real return of the past 20 years. A number of factors came together to create that once-in-a-lifetime performance, including the rise of the Information Age and the end of the Cold War. But most important was a secular decline in inflation from double-digit rates to around 1 percent currently. With deflationary forces gathering momentum from Silicon Valley to Shanghai, prices will stay stable to down for a considerable period of time.

Investors should temper their optimism about what they will earn in their retirement savings plans. However, the bond market should do relatively well. Bonds hold their value whenever inflation is tame. Odds are that stock and bond market returns will run neck and neck in a single-digit return derby over the coming decade.