“Despite 15 months of stock-market turmoil, many investors continue to expect extraordinarily high returns for their holdings,” writes Jonathan Clements in today’s Wall Street Journal. “My fear: These folks may be lulled into saving too little, thus imperiling their own retirement and their kids’ college education.

“How high are our expectations? Among investors offering a prediction for the market’s return over the next 10 years, 39% said stocks would deliver 15% a year or more, according to a survey from Gallup Organization and UBS PaineWebber.

“’This industry is famous for saying that past performance is no guarantee of future results,’ says Steven Norwitz, a vice president with T. Rowe Price Associates, the Baltimore mutual-fund manager. ‘But I don’t know how many people really believe us.’

“After two decades of dazzling market performance, it’s no surprise that expectations are high. Even if investors concede that stock results are likely to be lower, they often believe that they can buck the trend and continue to earn high returns.

“’Investors are overconfident,’” says Meir Statman, a finance professor at Santa Clara University in California. “’They think that they’ll earn more than the market. They all think they’re above average.’”

“But our abundant confidence could have devastating results. If we are disappointed by returns, we may abandon stocks, possibly when the market is deeply underwater. Worse still, we could save too little, falling short of our investment goals.

“The shortfall could be huge, especially if investors expect performance that matches the generous results of recent decades. For instance, over the 15 years though year-end 2000, stocks gained an average 16% a year, while bonds clocked 8.6%, T. Rowe Price calculates.

“How unusual was the stock market’s performance? You can divide the past 75 years into 61 rolling 15-calendar-year stretches, starting with the 15 years through year-end 1940, continuing with the 15 years through 1941 and so on.

“Out of these 61 rolling periods, there were just 13 occasions when stocks generated 16% a year or more, according to Chicago’s Ibbotson Associates. Most of these dazzling 15-year stretches ended in the late 1950s, the early 1960s and the late 1990s.