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GMO Calls for Another Ugly Decade of Equity Returns

Unlike the investment banks that prioritize making money off of their clients, GMO seems to think making smart investment decisions is the more important job.  On an annual basis GMO releases their 7 year forecasts for different asset classes.  Most recently they released a rather uninspiring forecast that puts US equities as one of the least attractive:

Shedlock-140115-Fig-1

If you get a little skeptical about the forecast, take a look at their 10 year results from 1999-2009.  I can’t say that there are many who called it better:

Shedlock-140115-Fig-3

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3 Responses

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  1. Gio D says

    If we look at GMO Assett Class forecast for ’99-’09 decade, we can note than only in 4 assett class over 11 forecast was in the range of 10%…i think that an accurate forecast should remain into this max deviation (a real return year by year in a long period is significantly different even for a 1% difference)…so we can conclude that a 36% accuracy (4over11) is not that good score…I would not even posted it.
    Moreover I don’t understand the 1% forecast for us bonds in next seven year…now the 7 years bond return is 2,3 %…if we consider a 0,4% inflation (this is the cash assett class forecast) we stay at 1,9 return yearly…
    I don’t love forecast but if I look at the post “a worst decade ever” I feel pretty sure that for the prox 4-5 decades at least equity will perform pretty good…after the 1930-1940, stock performance was strong for 6 decades, and as u say, this thime (2000-2010), the performance was even worse than the previous “negative decade”…

Continuing the Discussion

  1. Thursday links: developing a routine | Abnormal Returns linked to this post on January 23, 2014

    […] GMO is still looking for a poor decade for equities.  (Sober Look) […]

  2. Top clicks this week on Abnormal Returns | Abnormal Returns linked to this post on January 26, 2014

    […] GMO is still looking for a poor decade for equities.  (Sober Look) […]



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