Adjusting Average Returns in Monte Carlo

I would like to see a single window showing the default rates of return for all of the "canned" assets used in Monte Carlo, with an option either to change the rates or restore the defaults. This is because I think that your rates based on historical data series are unrealistic, leading users to smooth their consumption based on overoptimistic projections of future returns. There is ample evidence that individual investors typically receive below-market returns. The most obvious reason is mutual fund expenses, but there are also more subtle problems involving the timing of capital flows in and out of the markets, investigated by Ilia Dichev (See "What are stock investors' actual historical returns?" in American Economic Review 03/07). More money flows in when stocks are already priced above their historic averages, increasing the likelihood of subpar performance going forward. "Stock investors' actual returns are considerably lower than those...documented in the existing literature on historical stock returns." How much lower? 1.3% lower for the NYSE/AMEX market over 1926-2002, 5.3% for Nasdaq over 1973-2002, and an average of 1.5% for 19 major stock markets around the world over 1973-2004. Add a percent or two of expenses to these numbers, plus a bit more for unstated transaction costs, and the lower returns compounded over many years can make a huge difference.

I appreciate the difficulties you face in designing a useful implementation of Monte Carlo simulation. It is impractical to expect users to supply their own long data series, betas and variances, so some reliance on canned data is unavoidable. But it is unwise to force users to use historical return rates that may be too good to be true. I'm looking for a simple way to adjust the averages without having to re-create asset classes with a complete set of statistics. Otherwise I would be afraid to smooth my consumption based on these projections.