This is becoming my mini-market update, provided by data from GMO, of which guru Jeremy Grantham is the chairman.
Below are the GMO seven-year forecasts of a variety of asset classes. As can be seen, GMO is quite bearish on nearly everything besides "high-quality" U.S. stocks, large international stocks, emerging markets, and timber.
Jeremy Grantham describes what GMO means by high-quality U.S. stocks: "It's high return, stable return and low debt." And, "Quality is quality; we kind of know what it is. It's a great franchise company." However, no exact metrics have been stated.
I assume they (GMO/Grantham) are referring to blue chip stocks, with strong balance sheets and high dividends, stocks such as Coke, Proctor & Gamble, Johnson & Johnson and other Dow components that have pricing power. However, I have never seen the exact criteria for what qualifies as high quality.
To see GMO's forecast from last month click on the following link: http://www.gurufocus.com/news/126842. GMO has made some slight changes, including lowering their estimates of returns in emerging markets. I am not sure why they are so bullish on emerging markets to begin with, as signs of macro problems such as inflation and higher valuations lead me to believe that they will not have the returns that many people are expecting. It also is hard to group all emerging market countries together because, despite any correlation, the economies of Russia and India, for example, are far different.
Overall, this chart largely agrees with my views presented in my latest monthly valuation article, where I am quite bearish about overall market returns in the coming decade. Seth Klarman also believes that this will be another lost decade for stocks. Ironically (IMHO), it is probably easier to predict what the overall market will do in the next 10 years instead of the next few months.
If anyone has an opinion on the long-term market outlook, feel free to comment below.
GMO Forecast for next 7 years April 2011
Below are the GMO seven-year forecasts of a variety of asset classes. As can be seen, GMO is quite bearish on nearly everything besides "high-quality" U.S. stocks, large international stocks, emerging markets, and timber.
Jeremy Grantham describes what GMO means by high-quality U.S. stocks: "It's high return, stable return and low debt." And, "Quality is quality; we kind of know what it is. It's a great franchise company." However, no exact metrics have been stated.
I assume they (GMO/Grantham) are referring to blue chip stocks, with strong balance sheets and high dividends, stocks such as Coke, Proctor & Gamble, Johnson & Johnson and other Dow components that have pricing power. However, I have never seen the exact criteria for what qualifies as high quality.
To see GMO's forecast from last month click on the following link: http://www.gurufocus.com/news/126842. GMO has made some slight changes, including lowering their estimates of returns in emerging markets. I am not sure why they are so bullish on emerging markets to begin with, as signs of macro problems such as inflation and higher valuations lead me to believe that they will not have the returns that many people are expecting. It also is hard to group all emerging market countries together because, despite any correlation, the economies of Russia and India, for example, are far different.
Overall, this chart largely agrees with my views presented in my latest monthly valuation article, where I am quite bearish about overall market returns in the coming decade. Seth Klarman also believes that this will be another lost decade for stocks. Ironically (IMHO), it is probably easier to predict what the overall market will do in the next 10 years instead of the next few months.
If anyone has an opinion on the long-term market outlook, feel free to comment below.
GMO Forecast for next 7 years April 2011
