New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

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MFInvestor
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New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by MFInvestor » Sat Aug 11, 2018 11:31 am

"Vanguard Warns of Worsening Odds for the Economy and Markets"

https://www.nytimes.com/2018/08/10/busi ... onomy.html

The chances of a recession by the end of 2020 are mounting. And the prospects for the American stock market in the next decade have worsened appreciably.

Those are prognoses, not facts. But they’re not just offhand projections, either. They are the sober assessments of Vanguard, the $5 trillion asset management firm. And they suggest that the current good times may amount to a reprieve: an opportunity to make sure that you are prepared for a storm.

Vanguard, known for its caution, emphasizes that this is a general forecast.

Vanguard tracks data to predict the likelihood of a recession at certain points in the future. In recent years, the company has put the probability of a recession six months out at close to 10 percent. Now, Vanguard says the chances of one by late 2020 are between 30 and 40 percent. That’s Vanguard’s highest-ever estimate for that time frame, Mr. Davis said.

The forecast suggests opportunities, not just problems, Mr. Davis said. The 10-year outlook, for example, includes lower projected annualized returns, but still positive ones, for these two stock categories:

■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down from a projection of an 8 percent annualized return, made in March 2013;
■ Stocks from markets outside the United States, 6.5 percent, annualized, down from 8.7 percent in 2013.
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up from 1.7 percent in March 2013;
■ Bonds from outside the United States, 2.9 percent, up from 1.8 percent;

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by malabargold » Sat Aug 11, 2018 11:53 am

Anytime there’s been a long bull market prospects for new
invested money dim in the short run and a recession obviously
draws nearer.
No reason to stop investing in equities if you can hold on
through the coming dips

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by arcticpineapplecorp. » Sat Aug 11, 2018 12:04 pm

Thank you. I look forward to buying more shares at lower prices with the same amount of money.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by sambb » Sat Aug 11, 2018 12:04 pm

What historically has happened after a 10 year bull market run?

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by UpperNwGuy » Sat Aug 11, 2018 4:42 pm

sambb wrote:
Sat Aug 11, 2018 12:04 pm
What historically has happened after a 10 year bull market run?
Usually there is a bear market followed by another bull market.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by alpenglow » Sat Aug 11, 2018 5:00 pm

arcticpineapplecorp. wrote:
Sat Aug 11, 2018 12:04 pm
Thank you. I look forward to buying more shares at lower prices with the same amount of money.
:sharebeer

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by alwayshedge » Sat Aug 11, 2018 5:19 pm

I don't understand why Vanguard focuses so much on avoiding the noise, staying the course and yet they put out research like this constantly it seems as of late.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by iceport » Sat Aug 11, 2018 5:25 pm

A decent article, though if this is the columnist I think he is, I'm not generally a fan.

This was my favorite line:
And they suggest that the current good times may amount to a reprieve: an opportunity to make sure that you are prepared for a storm.
It is true that now would be a more opportune time to reassess risk tolerances than after a crash...
"Discipline matters more than allocation.” ─William Bernstein

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Broken Man 1999 » Sat Aug 11, 2018 5:49 pm

OTOH, from the same link:

“You could also say the chance of a recession not occurring by the end of 2020 are 60 to 70 percent,” said Fran Kinniry, a principal in Vanguard’s investment strategy group.

I say party on! :sharebeer

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by bradshaw1965 » Sat Aug 11, 2018 5:54 pm

alwayshedge wrote:
Sat Aug 11, 2018 5:19 pm
I don't understand why Vanguard focuses so much on avoiding the noise, staying the course and yet they put out research like this constantly it seems as of late.
Hire some economists and they are going to make forecasts. It's like expecting the scorpion not to sting you to not expect this kind of research.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by FrugalInvestor » Sat Aug 11, 2018 6:07 pm

Haven't we been hearing similar prognostications years now?

And again, it's all just noise if one is invested for the long-term even if it emanates from Vanguard.

And as others have already said, being able to buy shares at lower costs is likely good news in the short to medium term.

Ignore the noise!
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by TimeRunner » Sat Aug 11, 2018 6:08 pm

bradshaw1965 wrote:
Sat Aug 11, 2018 5:54 pm
alwayshedge wrote:
Sat Aug 11, 2018 5:19 pm
I don't understand why Vanguard focuses so much on avoiding the noise, staying the course and yet they put out research like this constantly it seems as of late.
Hire some economists and they are going to make forecasts. It's like expecting the scorpion not to sting you to not expect this kind of research.
The takeaway I got from the article is that Vanguard is more concerned that customers haven't rebalanced their asset allocation after a significant stock market run-up, and this was a call to rebalance and stay the course.
One cannot enlighten the unconscious.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by bradshaw1965 » Sat Aug 11, 2018 6:10 pm

TimeRunner wrote:
Sat Aug 11, 2018 6:08 pm
bradshaw1965 wrote:
Sat Aug 11, 2018 5:54 pm
alwayshedge wrote:
Sat Aug 11, 2018 5:19 pm
I don't understand why Vanguard focuses so much on avoiding the noise, staying the course and yet they put out research like this constantly it seems as of late.
Hire some economists and they are going to make forecasts. It's like expecting the scorpion not to sting you to not expect this kind of research.
The takeaway I got from the article is that Vanguard is more concerned that customers haven't rebalanced their asset allocation after a significant stock market run-up, and this was a call to rebalance and stay the course.
I was fine with the article and found it helpful. Still think economists are going to put probability on future events and to expect otherwise will cause frustration.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by FIREchief » Sat Aug 11, 2018 6:10 pm

If you're an "expert" and you honestly admit, "I have no idea what is going to happen," then nobody listens to you. So you get what we have here.... :annoyed
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by GAAP » Sat Aug 11, 2018 6:23 pm

FIREchief wrote:
Sat Aug 11, 2018 6:10 pm
If you're an "expert" and you honestly admit, "I have no idea what is going to happen," then nobody listens to you. So you get what we have here.... :annoyed
The trick is to make weighty proclamations, smothered with impressive statistical malarky -- and then charge people for interpreting the results. Sounds like a racket to me.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by MnD » Sat Aug 11, 2018 6:42 pm

"In recent years, the company has put the probability of a recession six months out at close to 10 percent.
Now, Vanguard says the chances of one by late 2020 are between 30 and 40 percent."


"Six months out" is February 2019. Late 2020 is 27-28 months out.
So these two statements are not incongruous despite the authors attempt to imply some major sea change has occurred.
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Forecasts?

Post by Taylor Larimore » Sat Aug 11, 2018 7:16 pm

Bogleheads:

If you are a stay-the-course investor like I am, forecasts are meaningless. I stopped reading them years ago and our portfolio performance greatly improved .
John Kenneth Galbraith, famed economist: "The only function of economic forecasting is to make astrology look respectful."
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by 2015 » Sat Aug 11, 2018 7:33 pm

The only thing that bothers me about Vanguard's latest marketing-disguised-as-"information" piece is that such useless and quite noisy "publications" in aggregate increase costs. I'm perfectly okay if the likes of Fidelity, Schwab, et al., do it (I have no accounts there), and am even oblivious to the same tripe consistently coming out of bloggers, the overconfident, financial "publications" of any sort, as well as academics attempting to further their careers with seemingly endless new "papers". I just don't like it when such noise affects me personally, regardless of how little the cost.

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Re: Forecasts?

Post by Tdubs » Sat Aug 11, 2018 8:05 pm

Taylor Larimore wrote:
Sat Aug 11, 2018 7:16 pm
Bogleheads:

If you are a stay-the-course investor like I am, forecasts are meaningless. I stopped reading them years ago and our portfolio performance greatly improved .
John Kenneth Galbraith, famed economist: "The only function of economic forecasting is to make astrology look respectful."
Best wishes.
Taylor
Apparently, Ezra Solomon.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by whodidntante » Sat Aug 11, 2018 8:28 pm

I think it's entirely reasonable to consider expected returns when doing financial planning. I'm not sure why so many posters here dismiss forecasts out of hand. The message is not that you should overreact and sell everything.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by fortyofforty » Sat Aug 11, 2018 9:11 pm

Many experts--even if they're employed by Vanguard--are hoping desperately for a recession. It's the only prayer they have left. Keep predicting a recession and eventually you'll be right. There is no difference between these economic forecasts and Jim Cramer's nightly predictions. Booyah, Vanguard.

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Re: Forecasts?

Post by Nicolas » Sat Aug 11, 2018 10:02 pm

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Last edited by Nicolas on Wed Sep 05, 2018 7:58 pm, edited 1 time in total.

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Re: Forecasts?

Post by FrugalInvestor » Sat Aug 11, 2018 10:04 pm

Nicolas wrote:
Sat Aug 11, 2018 10:02 pm
Taylor Larimore wrote:
Sat Aug 11, 2018 7:16 pm
Bogleheads:

If you are a stay-the-course investor like I am, forecasts are meaningless. I stopped reading them years ago and our portfolio performance greatly improved .
John Kenneth Galbraith, famed economist: "The only function of economic forecasting is to make astrology look respectful."
Best wishes.
Taylor
John Kenneth Galbraith should have used the word “respectable” instead of respectful, it would make more sense grammatically. How can astrology respect anything, being inanimate?
He did. Just a typo.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Re: Forecasts?

Post by Tdubs » Sat Aug 11, 2018 10:29 pm

FrugalInvestor wrote:
Sat Aug 11, 2018 10:04 pm
Nicolas wrote:
Sat Aug 11, 2018 10:02 pm
Taylor Larimore wrote:
Sat Aug 11, 2018 7:16 pm
Bogleheads:

If you are a stay-the-course investor like I am, forecasts are meaningless. I stopped reading them years ago and our portfolio performance greatly improved .
John Kenneth Galbraith, famed economist: "The only function of economic forecasting is to make astrology look respectful."
Best wishes.
Taylor
John Kenneth Galbraith should have used the word “respectable” instead of respectful, it would make more sense grammatically. How can astrology respect anything, being inanimate?
He did. Just a typo.
Again, Ezra Solomon said it first.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by fgtayl01 » Sat Aug 11, 2018 10:42 pm

As I understand this, they are giving a probability of a recession by late 2020.
Not a bear market. They may be correlated events but have different probabilities and timeframes.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by david1082b » Sat Aug 11, 2018 10:57 pm

Now, Vanguard says the chances of one by late 2020 are between 30 and 40 percent. That’s Vanguard’s highest-ever estimate for that time frame, Mr. Davis said.
What was their estimate in the middle of 2005 for a recession by late 2007? Or didn't they have economists back then making these predictions? Maybe Vanguard doesn't need to employ these people, perhaps they could hire better customer service instead? No one will complain if the recession estimate is wrong, but customer service problems are definitely complained about a lot.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by columbia » Sun Aug 12, 2018 7:02 am

I take such concerns seriously and I tend to take them even more seriously, when I see others disregard them. You never want to be the last person with your head in the sand.

And, yes, I have indeed reduced my equity exposure during this calendar year. :)
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Stormbringer » Sun Aug 12, 2018 7:14 am

What's actionable is to review your asset allocation and rebalance if things have gotten out of whack.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by fortyofforty » Sun Aug 12, 2018 7:16 am

The only way these guys can survive with even a shred of credibility left is by making a lot of predictions and counting on the inability of most people to retrieve their previous predictions to check them for accuracy.

As was said, keep an asset allocation with which you can live, and rebalance accordingly.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by 2015 » Sun Aug 12, 2018 12:35 pm

whodidntante wrote:
Sat Aug 11, 2018 8:28 pm
I think it's entirely reasonable to consider expected returns when doing financial planning. I'm not sure why so many posters here dismiss forecasts out of hand. The message is not that you should overreact and sell everything.
I eschew forecasts because investing is nested in a complex adaptive system, with endless actors and unknown/unknowable inputs/outputs, making all manner of predictions superfluous. A prudent course of action would be to consider and plan for worst case scenarios during the planning phase of creating an IPS, not when every Larry, Moe and Curly (historic pun intended) comes out with a latest forecast.

The true message is that by reading such noise one has fallen for having one's eyeballs hijacked. For the foreseeable future, we are living in the Age of Attention, having moved from your time is your money is your life, to your attention is your money is your life. Reading financial forecasts is indeed tantamount to voodoo and detracts one from reading outside the fields of economics, personal finance and investing, where true value is to be found (and which in fact turns out to be most helpful to investing). For example, understanding how our own perceptive, cognitive, and decision-making processes are highly flawed and not to be trusted has more of an impact on our financial results than the most cleverly designed portfolio.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by whodidntante » Sun Aug 12, 2018 12:53 pm

Something about a long running bull market stokes hubris. This advice from the article seems reasonable to me.
Doing a serious gut check and realistically assessing how you will behave if a major downturn occurs can prevent a lot of pain later. “You don’t want to find out that you don’t have enough car insurance or home insurance until after an accident happens,” Mr. Kinniry said. “You’re better off if you do the inventory now.”

And if the markets do turn out to provide lower returns in the next decade than in the last one, it may be possible to compensate by taking measures that you can at least partly control, perhaps by working more, increasing savings or reducing spending.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by TomatoTomahto » Sun Aug 12, 2018 1:00 pm

When Rick Ferri, or William Bernstein, or, heck, even the BH Wiki predict that future returns will be lower than we have been accustomed to, nobody slams them.

As for the drag on ER from hiring an extra economist or two, I can’t imagine that it’s more than decimal dust with Vanguard’s size.

I think mentioning that the punch bowl might get watered down is almost a Public Service Announcement. Those who are least aware need to hear it the most.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Broken Man 1999 » Sun Aug 12, 2018 1:03 pm

Stormbringer wrote:
Sun Aug 12, 2018 7:14 am
What's actionable is to review your asset allocation and rebalance if things have gotten out of whack.
Yeah, that is pretty much what I got out of it.

Hopefully those who have enjoyed this great bull market are also watching their AA, as certainly their equity portion has most likely become a larger portion of their AA, if they haven't rebalanced. Some probably have removed some equity via spending, or RMDs.

Those who keep a close eye on their AA aren't going to need such info, but it might spur some others to see if they are still at the AA they desired.

At any rate, I see it as a PSA.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Earl Lemongrab » Sun Aug 12, 2018 3:34 pm

Why would I think that Vanguard has any valuable insight into market movements years in the future? What sort of resources have they invested in researching the issue? If a lot, I wonder why they would spend the money. If not much, then what is the information worth?

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by fortyofforty » Sun Aug 12, 2018 6:48 pm

Every time the stock market reaches new highs, it is easy to declare that future returns will be lower than those achieved previously. Is it true? No, not necessarily. Sometimes, as we've just seen, despite the worries and concerns and fears, the market keeps climbing. We've gone a long time without a full-blown recession. It is easy to declare that we are due for a recession. In fact, we're overdue. But what does that mean, exactly? What special insights do Vanguard economists have that are not available to the market? And how is the information actionable to retail investors? If it's more insightful than "rebalance according to plan", "stay the course", and "focus on the long-term" I'd like to hear it.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by AlphaLess » Sun Aug 12, 2018 7:29 pm

MFInvestor wrote:
Sat Aug 11, 2018 11:31 am
■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down from a projection of an 8 percent annualized return, made in March 2013;
■ Stocks from markets outside the United States, 6.5 percent, annualized, down from 8.7 percent in 2013.
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up from 1.7 percent in March 2013;
■ Bonds from outside the United States, 2.9 percent, up from 1.8 percent;
[/quote]

Numbers seem a bit fishy, and here is why:
- ROUGHLY agree with the US stock prediction, although 3.9% might be too much GIVEN EARLIER prediction, and the so-far REALIZATION,
- bond prediction: not so much,
- - 10 year is under 3%,
- - bond yields are going up,
- - typical diversified US Treasury portfolio is 5-6 years in duration,
- - 5-6 year yield is probably closer to 2.8%,
- - how does one expect a 3.3% return? Can't get a single 10-year bond and get that by holding to maturity (as that would give you roughly 2.95%). Can't get a 5-6 year duration mutual fund as that would yield EVEN lower for the next 5 years. Gambling with a longer bond portfolio by expecting price appreciation (due to higher yields) is not going to happen either.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by AlphaLess » Sun Aug 12, 2018 7:30 pm

Best thing that can happen to accumulating investors is a stock market dip that occurs soon. And the bigger, the better.

I look forward to a 10%, 20%, even a 30% drop in SP500.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by AlphaLess » Sun Aug 12, 2018 7:32 pm

Earl Lemongrab wrote:
Sun Aug 12, 2018 3:34 pm
Why would I think that Vanguard has any valuable insight into market movements years in the future? What sort of resources have they invested in researching the issue? If a lot, I wonder why they would spend the money. If not much, then what is the information worth?
Bond (treasury) information is well worth it, because it is a fixed-income instrument, and if held to maturity, you will exactly get the advertized coupon.

As for stocks, you can use a Case Shiller, or similar PE, to estimate, say, 10-year return.

However, with stocks, you ALSO need the FUTURE value of the 'XYZ PE'.

E.g., if we fast forward to 10 years, and we have not seen a major drop, and the Shiller PE is at 50, then we know that the market has done significantly better than the Vanguard prediction.
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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by AlphaLess » Sun Aug 12, 2018 7:34 pm

sambb wrote:
Sat Aug 11, 2018 12:04 pm
What historically has happened after a 10 year bull market run?
It does not matter because:
- this time is not going to be the same,
- there are enough 10-year bull market data points to get any meaningful estimate.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by fortyofforty » Mon Aug 13, 2018 5:57 am

AlphaLess wrote:
Sun Aug 12, 2018 7:34 pm
sambb wrote:
Sat Aug 11, 2018 12:04 pm
What historically has happened after a 10 year bull market run?
It does not matter because:
- this time is not going to be the same,
- there are enough 10-year bull market data points to get any meaningful estimate.
What has historically happened after an eight-year bull market? How about nine-year bull markets? What happens in year eleven? How about year twelve or year thirteen? It's easy to make predictions, as long as you don't put a time limit on your predictions to come true. I predict that we will have a bear market. There. That was easy. I used to think nobody knows nothin'. This thread shows me otherwise.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Carousel » Mon Aug 13, 2018 8:34 am

MFInvestor wrote:
Sat Aug 11, 2018 11:31 am

■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down from a projection of an 8 percent annualized return, made in March 2013;
■ Stocks from markets outside the United States, 6.5 percent, annualized, down from 8.7 percent in 2013.
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up from 1.7 percent in March 2013;
■ Bonds from outside the United States, 2.9 percent, up from 1.8 percent;
[/quote]

Are these projections for nominal returns or real returns? How do we tell? Is it always nominal unless they say otherwise?

Thank you.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by midareff » Mon Aug 13, 2018 8:40 am

The one thing you can always count on...... lots of forecasts from lots of places and since nobody knows nothing, nothing is not actionable.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by ReformedSpender » Mon Aug 13, 2018 8:47 am

AlphaLess wrote:
Sun Aug 12, 2018 7:30 pm

I look forward to a 10%, 20%, even a 30% drop in SP500.
At the expense of increased unemployment, increased defaults, etc?
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by Call_Me_Op » Mon Aug 13, 2018 8:52 am

AlphaLess wrote:
Sun Aug 12, 2018 7:29 pm
MFInvestor wrote:
Sat Aug 11, 2018 11:31 am
■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down from a projection of an 8 percent annualized return, made in March 2013;
■ Stocks from markets outside the United States, 6.5 percent, annualized, down from 8.7 percent in 2013.
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up from 1.7 percent in March 2013;
■ Bonds from outside the United States, 2.9 percent, up from 1.8 percent;
Numbers seem a bit fishy, and here is why:
- ROUGHLY agree with the US stock prediction, although 3.9% might be too much GIVEN EARLIER prediction, and the so-far REALIZATION,
- bond prediction: not so much,
- - 10 year is under 3%,
- - bond yields are going up,
- - typical diversified US Treasury portfolio is 5-6 years in duration,
- - 5-6 year yield is probably closer to 2.8%,
- - how does one expect a 3.3% return? Can't get a single 10-year bond and get that by holding to maturity (as that would give you roughly 2.95%). Can't get a 5-6 year duration mutual fund as that would yield EVEN lower for the next 5 years. Gambling with a longer bond portfolio by expecting price appreciation (due to higher yields) is not going to happen either.
[/quote]

They said a diversified portfolio of US bonds. You are citing only treasury yields. Corporate yields are higher.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by harvestbook » Mon Aug 13, 2018 9:23 am

sambb wrote:
Sat Aug 11, 2018 12:04 pm
What historically has happened after a 10 year bull market run?
It's been 10 years if you measure wrong. Many people count the bull to new all-time highs in 2013, and even that's been broken since. Aside from the steepness of the last two crashes, the market looks pretty much the same as ever. We've had two bear markets this decade and plenty of corrections.

http://thereformedbroker.com/2018/08/09 ... ts-to-bed/
I'm not smart enough to know, and I can't afford to guess.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by bobcat2 » Mon Aug 13, 2018 9:39 am

Here's more useful and trenchant advice from an economist.
Financial and economic crises take longer to arrive than you can possibly imagine, but when they do come, they happen faster than you can possibly imagine.
- Rudiger Dornbusch


BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by columbia » Mon Aug 13, 2018 9:42 am

harvestbook wrote:
Mon Aug 13, 2018 9:23 am
sambb wrote:
Sat Aug 11, 2018 12:04 pm
What historically has happened after a 10 year bull market run?
It's been 10 years if you measure wrong. Many people count the bull to new all-time highs in 2013, and even that's been broken since. Aside from the steepness of the last two crashes, the market looks pretty much the same as ever. We've had two bear markets this decade and plenty of corrections.

http://thereformedbroker.com/2018/08/09 ... ts-to-bed/
It should be noted that Joshua M Brown runs a company, which is based on you paying him to advise you how to make money on the stock market and/or trading for you. I have no doubt that such people wish to convince their customers of the limitless potential of stocks.
If you leave your head in the sand for too long, you might get run over by a Jeep.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by invst65 » Mon Aug 13, 2018 9:48 am

alwayshedge wrote:
Sat Aug 11, 2018 5:19 pm
I don't understand why Vanguard focuses so much on avoiding the noise, staying the course and yet they put out research like this constantly it seems as of late.
Given the business they are in, dampening expectations for investors makes sense. I mean, how would you feel if they predicted 8% returns and you only got 3%? But who is going to complain if returns are higher than predicted?

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by leo383 » Mon Aug 13, 2018 9:59 am

Funny considering Vanguard's raison d'etre is the uselessness of prognosticating markets.

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Re: New York Times--Vanguard Warns of Worsening Odds for the Economy and Markets

Post by juliewongferra » Mon Aug 13, 2018 12:06 pm

MFInvestor wrote:
Sat Aug 11, 2018 11:31 am
"Vanguard Warns of Worsening Odds for the Economy and Markets"

https://www.nytimes.com/2018/08/10/busi ... onomy.html

The chances of a recession by the end of 2020 are mounting. And the prospects for the American stock market in the next decade have worsened appreciably.

Those are prognoses, not facts. But they’re not just offhand projections, either. They are the sober assessments of Vanguard, the $5 trillion asset management firm. And they suggest that the current good times may amount to a reprieve: an opportunity to make sure that you are prepared for a storm.

Vanguard, known for its caution, emphasizes that this is a general forecast.

Vanguard tracks data to predict the likelihood of a recession at certain points in the future. In recent years, the company has put the probability of a recession six months out at close to 10 percent. Now, Vanguard says the chances of one by late 2020 are between 30 and 40 percent. That’s Vanguard’s highest-ever estimate for that time frame, Mr. Davis said.

The forecast suggests opportunities, not just problems, Mr. Davis said. The 10-year outlook, for example, includes lower projected annualized returns, but still positive ones, for these two stock categories:

■ United States stocks, an expected 10-year return of 3.9 percent, annualized, down from a projection of an 8 percent annualized return, made in March 2013;
■ Stocks from markets outside the United States, 6.5 percent, annualized, down from 8.7 percent in 2013.
■ A diversified portfolio of United States bonds, 3.3 percent, annualized, up from 1.7 percent in March 2013;
■ Bonds from outside the United States, 2.9 percent, up from 1.8 percent;

So in other words, Vanguard expects stocks to outperform bonds over the long-haul? Good, nothing to see here.
REBALANCE ACCORDINGLY AND STAY THE COURSE!

cheers,
jwf
If you aren't familiar with Mr. Bogle and his investment philosophy, then you don't know Jack!

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