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Speaking of timber, I wonder what form the 4.8% forecast is projecting? The stocks of timber resource companies? Actual direct ownership of timber resources? What kind of timber: used for paper & pulp products (probably not) or construction grade? If construction, why would timber go up and none of the other resources associated with construction?
I share Old Joe's puzzlement over the GMO forecast that seems to decouple both Timber and Emerging Markets from US equity returns.
For example, correlation coefficients between US equity and Emerging Markets in the past have been as high as 0.8. Recently it has dropped some to roughly 0.6. That's still reasonable coupling. Emerging markets depend on prosperity in the developed nations.
In GMO's world, something has changed. I'm not familiar with their analyses methods. Why the current decoupling? These are very smart investors.
I share Old Joe's puzzlement over the GMO forecast that seems to decouple both Timber and Emerging Markets from US equity returns.
For example, correlation coefficients between US equity and Emerging Markets in the past have been as high as 0.8. Recently it has dropped some to roughly 0.6. That's still reasonable coupling. Emerging markets depend on prosperity in the developed nations.
In GMO's world, something has changed. I'm not familiar with their analyses methods. Why the current decoupling? These are very smart investors.
Best Wishes.
I'm sure their reasons are strictly valuation based:
US markets valuations from the WSJ:
Emerging Markets valuations per M*, from the Vanguard Emerging Markets Stock Index Fund:
re "timber"- an excerpt from a current article in the WSJ:
U.S. Home-Builder Confidence Hits Highest Level in Nearly a Decade "WASHINGTON—A gauge of home-builder sentiment hit its highest level since November 2005, reflecting confidence in a steadily improving U.S. housing market.
An index of builder confidence in the market for new single-family homes stood at a seasonally adjusted level of 60 in July, the National Association of Home Builders said Thursday. A reading over 50 means most builders generally see conditions as positive.
June’s reading was revised up one point to 60, marking two straight months that the index has been at its highest point in more than nine years. Economists surveyed by The Wall Street Journal expected a reading of 59 in July. "
Comments
(I'm tossing out timber, and "US High Quality" is subject to interpretation........
Regards,
Ted
I share Old Joe's puzzlement over the GMO forecast that seems to decouple both Timber and Emerging Markets from US equity returns.
For example, correlation coefficients between US equity and Emerging Markets in the past have been as high as 0.8. Recently it has dropped some to roughly 0.6. That's still reasonable coupling. Emerging markets depend on prosperity in the developed nations.
In GMO's world, something has changed. I'm not familiar with their analyses methods. Why the current decoupling? These are very smart investors.
Best Wishes.
US markets valuations from the WSJ:
Emerging Markets valuations per M*, from the Vanguard Emerging Markets Stock Index Fund:
U.S. Home-Builder Confidence Hits Highest Level in Nearly a Decade
"WASHINGTON—A gauge of home-builder sentiment hit its highest level since November 2005, reflecting confidence in a steadily improving U.S. housing market.
An index of builder confidence in the market for new single-family homes stood at a seasonally adjusted level of 60 in July, the National Association of Home Builders said Thursday. A reading over 50 means most builders generally see conditions as positive.
June’s reading was revised up one point to 60, marking two straight months that the index has been at its highest point in more than nine years. Economists surveyed by The Wall Street Journal expected a reading of 59 in July. "