Are large institutional investors betting the US market will continue to flatline?

I continue to read cheery essays on why we should invest in the market for our self-funded retirements. I also notice that, overall, our family investments have flatlined for about 6 years. Reminds me a bit of how things were in the US of the 1970s, or Japan of the 1990s. Greenspun makes an interesting assertion that one smart investor seems expect this trend to continue ...

Philip Greenspun's Weblog:

Harvard has picked a new investment manager for its $26 billion in liquid assets (the university is weathier than this but much of its wealth is in real estate). According to this New York Times story, Mohamed A. El-Erian is "an emerging markets bond specialist" from "the bond powerhouse Pimco". Choosing someone like this to manage its money is essentially a vote that public equities (stocks) will continue to perform poorly for some years to come. How is it possible for stock prices to remain stalled while corporations earn reasonably good profits and only pay out a small percentage of those profits as dividends (the average S&P 500 company pays out 32 percent of profits as a dividend)? Looting and dilution by managers granting themselves stock options. So Harvard, which has been mostly right since World War II and earned more than 19 percent in the last fiscal year, seems to be betting on the continued looting of American corporations by their managers and is apparently planning to put its money to work in foreign countries and via debt instruments.

The US feels more and more like 1989 Japan.