nedsaid wrote: ↑
Mon Sep 16, 2019 11:00 am
My take is that given currently high valuations for stocks and bonds that it is likely that future returns from both will be below historical averages. I say "likely" because predictions, as HomerJ has kept bringing up, keep being proven wrong by actual market performance. He has wondered if something is wrong with the valuation benchmarks and I am wondering that too.
Even if future returns do end up lower than historical averages, it probably won't be forever, because low returns have always been followed by higher returns.
If one believes in valuations and reversion to the mean, then reversion works both ways.
If valuations say expected returns are lower, then if that prediction comes true and returns are lower, at some point, valuations will be lower, and expected returns will be higher.
And over the long-term, you'll get a decent return.
So if someone wants to predict that short-term returns will be lower, I can see the logic. I'm not sure I believe it, because people have predicting that for years and years and years...
But I totally get the logic, and fully expect to see lower returns at some point and/or a crash at some point.
But then I expect it will be followed again by higher returns and a rise.
So anyone stating that "long-term" returns of 60/40 are "dead", frankly, has to offer some much more serious proof other than "short-term" indicators look bad.