Morningstar’s Ryan Leggio looked into the expected long term returns of a few notable managers that have great long-term track records. Here is the video:
Summary of Opinions:
· Most pessimistic among the group, predicting about 3% in the next seven years. [/b]
· Back in March 2009, they were actually projecting great returns for the S&P, about 9%-10% annualized over the next seven years. So they're not always pessimistic, but now with the big market run-up, they're definitely more pessimistic about the S&P 500.
John Hussman:
· Developed a proprietary metric called the price-to-peak earnings multiple. He looks at the peak earnings however many years back, puts the price in the S&P, and then tries to figure out, again, going from a regular P/E multiple of what the market is back down to its median or historical average, what would the valuation be.
· He recently put up the numbers, and for the next 10 years he's forecasting 5.7%.
· He was forecasting well in excess of 10% at the March 2009 bottoms, and that number has come in considerably.
Robert Shiller
· He uses backward-looking measures, and he really created this measure off of Graham and Dodd's work, which looked at trailing 10-year price-to-earnings multiples.
· We looked at the data back since the S&P started, back in 1957, and right now we're at 22 on the Shiller P/E. It was about 15 back in March 2009.
· Typically, whenever the Shiller P/E has been between 20 and 30, you get somewhere about a 6%-7% annualized return.
Morningstar:
· As of mid-April, if you look at any of our ETFs that track the S&P 500, you'll see that the price-to-fair value for the S&P, not the full market or wide-moat stocks, but just for the S&P, is right around fair value, which means our equity analysts, who are doing more forward projections than all of these measures which really rely on backward numbers, are projecting somewhere better than 8, 9, 10% annualized over the next decade.
GuruFocus.com has a page showing expected market return for the next seven years. The page is refreshed daily based on the total market cap of the US stock market, so you do not have to wait for the investment gurus to tell what their expectations are.
Summary of Opinions:
Jeremy Grantham of GMO:
· Most pessimistic among the group, predicting about 3% in the next seven years. [/b]
· Back in March 2009, they were actually projecting great returns for the S&P, about 9%-10% annualized over the next seven years. So they're not always pessimistic, but now with the big market run-up, they're definitely more pessimistic about the S&P 500.
John Hussman:
· Developed a proprietary metric called the price-to-peak earnings multiple. He looks at the peak earnings however many years back, puts the price in the S&P, and then tries to figure out, again, going from a regular P/E multiple of what the market is back down to its median or historical average, what would the valuation be.
· He recently put up the numbers, and for the next 10 years he's forecasting 5.7%.
· He was forecasting well in excess of 10% at the March 2009 bottoms, and that number has come in considerably.
Robert Shiller
· He uses backward-looking measures, and he really created this measure off of Graham and Dodd's work, which looked at trailing 10-year price-to-earnings multiples.
· We looked at the data back since the S&P started, back in 1957, and right now we're at 22 on the Shiller P/E. It was about 15 back in March 2009.
· Typically, whenever the Shiller P/E has been between 20 and 30, you get somewhere about a 6%-7% annualized return.
Morningstar:
· As of mid-April, if you look at any of our ETFs that track the S&P 500, you'll see that the price-to-fair value for the S&P, not the full market or wide-moat stocks, but just for the S&P, is right around fair value, which means our equity analysts, who are doing more forward projections than all of these measures which really rely on backward numbers, are projecting somewhere better than 8, 9, 10% annualized over the next decade.
GuruFocus.com has a page showing expected market return for the next seven years. The page is refreshed daily based on the total market cap of the US stock market, so you do not have to wait for the investment gurus to tell what their expectations are.
