GMO 7-Year Real Return Asset Class Forecast (Oct2018)

davfor

This forecast may be of interest. Its my recollection it is the first time in a few years any of the asset classes in one of their 7-year forecasts has exceeded the 6.5% Long‐term Historical U.S. Equity Return base line used for comparative purposes. And, the October 2018 timing means the forecast precedes the November market declines.

Stocks

US Large -3.9%
US Small -0.4%
Intl Large 0.8%
Intl Small 1.2%
Emerging 4.7%
Emerging Value 7.7%

Bonds

US Bonds 0.1%
Intl Bonds Hedged -1.9%
Emerging Debt 2.8%
US Inflation Linked Bonds 0.1%
US Cash 1.0%

Here is a link to their pretty chart. It may be necessary to register to see it.

https://gmo.com/docs/default-source/research-and-commentary/strategies/asset-class-forecasts/gmo-7-year-asset-class-forecast-(oct2018).pdf?sfvrsn=2

Ted

MFO Members: No registration needed.
Regards,
Ted
https://www.advisorperspectives.com/commentaries/2018/10/23/gmos-7-year-asset-class-forecasts-still-favor-emerging-markets-over-u-s-stocks

Derf

Does he use a crystal ball ?
Derf
P.S. Don't eat to much turkey !

MikeM

I believe these may be inflation adjusted return forecasts, but even so, pretty dismal outlook.

Tarwheel

GMO forecasts have had little relationship to reality — that is, actual returns— for many years. But sooner or later they might be right.

VintageFreak

Emerging Value 7.7%
It's about time GMO forecasts start coming true.
High freaking time.

PRIJX
MAVRX
And that Seafarer fund you cannot buy from Brokers
anything else?

davfor

@VintageFreak

This post from last December includes a list of EM mutual funds with a value tilt...

https://www.mutualfundobserver.com/discuss/discussion/37398/investing-in-a-world-of-overpriced-assets-with-a-single-reasonably-priced-asset-jeremy-grantham#latest

VintageFreak

@davfor. Thank you. Like I said, that was a year back. At some point of time I don't care who you are. If you keep on being wrong, you need to close shop. There have been reports Grantham has tried to sell GMO but has not been able to do so. You can't suck in bull market and then again suck in bear market.

IMO if GMO is wrong this time, it's going to be curtains for that form.

davfor

@VintageFreak

Your comment made me curious. So, I put my "google machine" to work. Here is a post that evaluates the 7-year GMO forecast from 12/31/2010. It appears the results shown in the post are probably accurate. Those results indicate GMO's stock market asset class forecasts weren't even close. The bond forecasts did better. A brief comment by Grantham discussing the discrepancies is included (he has commented extensively about the "richly" valued US stock market in his quarterly releases). There is also a link to their 12/31/2011 forecast. The seven year followup date for that one will soon be upon us. It looks like the US stock market forecasts will again turn out to be widely off base. Your skepticism about at least some of the GMO forecasts is strongly supported by these links. My full market cycle bias will cause me to continue to withhold judgement irrespective of 7 year "deadlines".

https://mymoneyblog.com/gmo-asset-return-forecasts-vs-actual-returns-2011-2018.html

lagunabeachbikini.com/index.php/2012/01/20/gmo-asset-return-forecast-31-dec-2011/

catch22

I offer this post (my follow-up) info from a few days ago; relative to "the smart folks" gett'in investment things correct or not.
https://www.mutualfundobserver.com/discuss/discussion/45519/worst-is-yet-to-come-for-stocks-morgan-stanley