Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

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GaryA505
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Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by GaryA505 » Thu Jan 10, 2019 1:38 pm

What do you think of this, from Christine Benz at Morningstar?
https://www.morningstar.com/articles/90 ... rns-2.html

Dude2
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by Dude2 » Thu Jan 10, 2019 1:53 pm

GMO
Highlights: negative 4.1% real (inflation-adjusted) returns for U.S. large caps over the next seven years; negative 0.2% real returns for U.S. bonds; 4.4% real returns for emerging-markets equities; 2.9% real returns for emerging-markets debt (November 2018).

As always, the return expectations from the notoriously pessimistic Grantham Mayo Van Otterloo run toward the gloomy side of our collected prognostications. <snip>
Very glad to see the curmudgeon vote in the article. Not popular to say these things.

DaftInvestor
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by DaftInvestor » Thu Jan 10, 2019 1:58 pm

GaryA505 wrote:
Thu Jan 10, 2019 1:38 pm
What do you think of this, from Christine Benz at Morningstar?
https://www.morningstar.com/articles/90 ... rns-2.html
I think it proves the point no one really knows what will happen. Everyone is making predictions and they are all different.

WhiteMaxima
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by WhiteMaxima » Thu Jan 10, 2019 2:02 pm

4.1% return from current level. What if we have a market drawdown of -30% and start from there. Then the number is about 7% (4%+3%) for the next 10 years, inline with history 7% performance. This tells you how overvalued we are now. The proplem is: Nobody knows what return would be.

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Toons
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by Toons » Thu Jan 10, 2019 2:09 pm

4%?
I am ecstatic
:sharebeer
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

columbia
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by columbia » Thu Jan 10, 2019 2:11 pm

Very little in those forecasts to indicate that 100% of my TIAA account cranking at 4.25% is a bad idea.

After If the markets take a terrible tumble, then we’re talking something different.

james7777
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by james7777 » Thu Jan 10, 2019 2:18 pm

what is those peoples past track record on predictions??

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GaryA505
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by GaryA505 » Thu Jan 10, 2019 2:26 pm

james7777 wrote:
Thu Jan 10, 2019 2:18 pm
what is those peoples past track record on predictions??
Ya, I was wondering that myself. :confused

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Svensk Anga
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by Svensk Anga » Thu Jan 10, 2019 6:01 pm

To counter all the gloom from the Morningstar summary, check out Prof. Damodaran's current estimate of the equity risk premium here: http://aswathdamodaran.blogspot.com/201 ... inder.html Note especially the graph of ERP over time toward the end of the post. If he is to be believed, current conditions make stocks very attractive. As for track record, his methodology said late 70's and 2009 were generational best buying opportunities. Maybe a bit early in the 70's, but right on for 2009. He also had a dim view of the ERP circa 1999. His method did not call the 2008/09 crash, but that did not initiate with high valuations but with credit/banking failures.

At all times, market prices are set in a tug of war between people who think like GMO and others with a more optimistic view. Given enough time, the optimists have been right.

2015
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by 2015 » Thu Jan 10, 2019 9:02 pm

I see we didn't need to get too far into the new year for Morningstar to be doling out the schlock. Love the obligatory use of the word "experts" in the title. Morningstar, you could at least be a little more translucent with your click bait.

Shamb3
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Re: Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition

Post by Shamb3 » Thu Jan 10, 2019 9:13 pm

I need better returns someday. The last 20 years turn out to like a nominal 5.5% annualized.

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