Asset Class Forecasts

Here's a 7-year real return asset class forecast from GMO LLC.  Overall I tend to be somewhat suspicious of these sorts of charts and I think it would be interesting to see how forecasts from 4-7 years ago looked versus actual returns.  My guess is they would not have pegged US stocks to have performed as well as they actually have during that time.  I'd also be willing to hazard a guess that the real return for US large cap companies will not be the negative 2.5% that the author is forecasting above.  

On the other hand I have no problem believe that bonds might post negative returns during that time and I think they might be spot on in their analysis of better performance from international related equities.  International markets always seem to look cheap relative to the US.  I've been saying that for years.  Maybe now is the time when these markets start to take on the leadership mantle.

Also note that these are the 7-year forecasts as of December 31st after our most recent sell-off.  I haven't looked but I wonder what this same analysis was showing say last summer.  Seems to me those real returns might have been even worse back then. 

Back midweek. 

*Long ETFs related to US and international equity markets in both client and personal accounts.

Link:  Advisorperspectives.com: 7-Year Asset Class Forecasts Increase After Steep Market Declines