Few Places to Hide: GMO Forecasts US Equity Losses for 7 Years

If you are looking for a place to hide, GMO forecasts cash and emerging markets.

GMO Disclaimer

The chart represents local, real return forecasts for several asset classes and not for any GMO fund or strategy. These forecasts are forward‐looking statements based upon the reasonable beliefs of GMO and are not a guarantee of future performance. Forward‐looking statements speak only as of the date they are made, and GMO assumes no duty to and does not undertake to update forward‐looking statements. Forward‐looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results may differ materially from those anticipated in forward‐looking statements. U.S. inflation is assumed to mean revert to long‐term inflation of 2.2% over 15 years.

Unfortunately, GMO does not cover gold or precious metals equities. I would be curious as to their take.

In addition to gold, I believe US treasuries will do well.

Mike "Mish" Shedlock

Comments
No. 1-7
Realist
Realist

Everyone is a market timer. It’s just that everyone’s time periods are different. For example, well run pension funds think in terms of the next 75 years in order to meet their obligations. Personally, I look ahead 10-20 years, for 95% of my portfolio. What I tend to see here (which I often disagree with) is people saying “a stock market crash” is coming. Hide in gold and treasuries. That will eventually be correct (maybe 1 year out of 10). In the remaining nine years you’ve missed out. It’s like saying “eventually a nuclear war is coming” so spend your whole life in an underground shelter. In other words; live your life in fear. I consider that bad advice.

Sechel
Sechel

GMOs isn't for market timers. At best it provides relative value and an estimate of future returns

Sechel
Sechel

What happened to managed timber?it was his favorite asset class for years

2banana
2banana

Is the EM carnage over already???

My guess it is still way, way too early. Not a single real EM currency crisis yet (that spread like the Thailand crisis)

Cash, gold, Treasuries...

Maybe some pipeline companies, tobacco, coal, uranium, well run companies hurt by tariffs and a select few beaten down biotechs...

caradoc-again
caradoc-again

Well the easy money has probably been made and it 'feels" like the downside is likely to outstrip any potential upside for a while for new money allocated.

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