06-30-2021, 08:37 PM
Can we stop listening to asset management expert predictions?
<!-- SC_OFF --><div class="md"><p>In late 2018, various asset managers made forecasts about the returns of the US and international stocks and bonds, quoting directly from this <a href="https://www.morningstar.com/articles/907378/experts-forecast-long-term-stock-and-bond-returns-2019-edition">Morningstar article</a>.</p> <p><strong>BlackRock Investment Institute</strong> Highlights: 7% nominal (non-inflation-adjusted) return for U.S. large caps over the next decade; 9% for non-U.S. large caps; 3.3% for the U.S. Aggregate Bond index (December 2018). </p> <p><strong>John C. Bogle, founder of Vanguard Group</strong> Highlights: 4%-5% returns for stocks (nominal); 4% nominal returns for bonds over the next decade (October 2018).</p> <p><strong>GMO</strong> 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).</p> <p><strong>J.P. Morgan Asset Management</strong> Highlights: 5.25% return assumption (nominal) for U.S. equities over a 10- to 15-year horizon; 4.5% nominal return assumption for U.S. investment-grade corporate bonds over 10- to 15-year holding period (October 2018)</p> <p><strong>Morningstar Investment Management</strong> Highlights: 1.8% 10-year nominal returns for U.S. stocks; 3.3% 10-year nominal returns for U.S. bonds (Sept. 30, 2018).</p> <p><strong>Research Affiliates</strong> Highlights: 0.7% real returns for U.S. large caps during the next 10 years; 0.5% real returns for the Barclays U.S. Aggregate Bond Index (Dec. 31, 2018; valuation-dependent model).</p> <p><strong>Vanguard</strong> Highlights: Nominal U.S. equity-market returns in the 3% to 5% range during the next decade; 6% to 8% returns for non-U.S. equities; 2.5% to 4.5% expected returns for global fixed-income markets (December 2018).</p> <p><strong>The results:</strong> (Jan 1, 2019 - June 30, 2021) </p> <p>US tot. market (VTI): Up 77% or 5.85% CAGR over a 10-yr period.<br/> International tot. market (VXUS): Up 39% or 3.35% CAGR over a 10-yr period.<br/> Emerging markets (IEMG): Up 42% or 3.51% CAGR over a 10-yr period.</p> <p>After just 2.5 years, if the US market completely flatlines for the next 7.5 years, we would still end the decade above predictions for 6/7 of these institutions/individuals for the US market. Can I just point out how terrible these people are at making forecasts? In what other profession can you be <em>this</em> bad and still have a job?</p> <p>I'm so sick of this continued pessimism with regard to the US stock market, subverting expectations and looking at international stocks as if they are even remotely comparable to the US. The P/E ratios in Canada, Europe and especially emerging markets are significantly lower for good reason and maybe it takes an outsider looking in (I'm Canadian) to see that. The stock market in the US is the holy grail and nobody looks after theirs quite like the Americans. The attitude towards the stock market as the primary vehicle towards retirement is like in no other country; whereas in other countries investing is an afterthought, in the US, it's front and center. In my lifetime I've never heard of a politician from another country except the US talk about the stock market. Not one. I could go on and on about other factors such as the fact that large US companies are just plain better, but I digress. The point is, in my opinion, these "experts" should not be given one iota of attention when it comes to making forecasts. I think too many have been scarred by the early 2000s and '08 crisis and that negative attitude still lingers. That was the exception, not the norm.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Afrofreak1"> /u/Afrofreak1 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ob4jcp/can_we_stop_listening_to_asset_management_expert/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ob4jcp/can_we_stop_listening_to_asset_management_expert/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>In late 2018, various asset managers made forecasts about the returns of the US and international stocks and bonds, quoting directly from this <a href="https://www.morningstar.com/articles/907378/experts-forecast-long-term-stock-and-bond-returns-2019-edition">Morningstar article</a>.</p> <p><strong>BlackRock Investment Institute</strong> Highlights: 7% nominal (non-inflation-adjusted) return for U.S. large caps over the next decade; 9% for non-U.S. large caps; 3.3% for the U.S. Aggregate Bond index (December 2018). </p> <p><strong>John C. Bogle, founder of Vanguard Group</strong> Highlights: 4%-5% returns for stocks (nominal); 4% nominal returns for bonds over the next decade (October 2018).</p> <p><strong>GMO</strong> 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).</p> <p><strong>J.P. Morgan Asset Management</strong> Highlights: 5.25% return assumption (nominal) for U.S. equities over a 10- to 15-year horizon; 4.5% nominal return assumption for U.S. investment-grade corporate bonds over 10- to 15-year holding period (October 2018)</p> <p><strong>Morningstar Investment Management</strong> Highlights: 1.8% 10-year nominal returns for U.S. stocks; 3.3% 10-year nominal returns for U.S. bonds (Sept. 30, 2018).</p> <p><strong>Research Affiliates</strong> Highlights: 0.7% real returns for U.S. large caps during the next 10 years; 0.5% real returns for the Barclays U.S. Aggregate Bond Index (Dec. 31, 2018; valuation-dependent model).</p> <p><strong>Vanguard</strong> Highlights: Nominal U.S. equity-market returns in the 3% to 5% range during the next decade; 6% to 8% returns for non-U.S. equities; 2.5% to 4.5% expected returns for global fixed-income markets (December 2018).</p> <p><strong>The results:</strong> (Jan 1, 2019 - June 30, 2021) </p> <p>US tot. market (VTI): Up 77% or 5.85% CAGR over a 10-yr period.<br/> International tot. market (VXUS): Up 39% or 3.35% CAGR over a 10-yr period.<br/> Emerging markets (IEMG): Up 42% or 3.51% CAGR over a 10-yr period.</p> <p>After just 2.5 years, if the US market completely flatlines for the next 7.5 years, we would still end the decade above predictions for 6/7 of these institutions/individuals for the US market. Can I just point out how terrible these people are at making forecasts? In what other profession can you be <em>this</em> bad and still have a job?</p> <p>I'm so sick of this continued pessimism with regard to the US stock market, subverting expectations and looking at international stocks as if they are even remotely comparable to the US. The P/E ratios in Canada, Europe and especially emerging markets are significantly lower for good reason and maybe it takes an outsider looking in (I'm Canadian) to see that. The stock market in the US is the holy grail and nobody looks after theirs quite like the Americans. The attitude towards the stock market as the primary vehicle towards retirement is like in no other country; whereas in other countries investing is an afterthought, in the US, it's front and center. In my lifetime I've never heard of a politician from another country except the US talk about the stock market. Not one. I could go on and on about other factors such as the fact that large US companies are just plain better, but I digress. The point is, in my opinion, these "experts" should not be given one iota of attention when it comes to making forecasts. I think too many have been scarred by the early 2000s and '08 crisis and that negative attitude still lingers. That was the exception, not the norm.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Afrofreak1"> /u/Afrofreak1 </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/ob4jcp/can_we_stop_listening_to_asset_management_expert/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/ob4jcp/can_we_stop_listening_to_asset_management_expert/">[comments]</a></span>Kind Regards R