James Montier from GMO along with his colleague, Matt Kadnar, put out an excellent piece last week. They explained how GMO gets to the -4.2% annualized real return forecast for U.S. Large Cap stocks.
With everyone herding into passive index funds, James and Matt begin by addressing what you are probably hearing from your clients. “U.S. stocks have outperformed for the last number of years, so I see no reason why that should not continue.”
Yes, but not likely. Here is a look at their forward return estimates for various asset classes.
Click below to read more about GMO’s methodology and forward estimates for the S&P 500.READ MORE