The question is what are the individual contributors to Total Shareholders Returns? Here’s a quick snapshot of the drivers of TRS for the S&P 500 from 2012 till 2021 (source)
Total Shareholder Return = Dividend Yield + Earnings Growth + Multiple Expansion
A concerning trend that we can immediately recognize is that P/E multiple expansion (i.e. the stock price rising faster than the underlying earnings) drove a significant proportion (41.6%) of the returns.
This is problematic as winning simply because the other person is willing to pay more is not a sustainable strategy. However, that seems to be the cards we have been dealt.