Jeremy Grantham, Piper Jaffray, United States discussed on The Ray Lucia Show
Was discussing the seven-year asset class return forecasts by none other than GM. Oh, Jeremy Grantham the G in GMO. Also, I wanna talk about the market what's happening with the market right now. Because you know, we went from record is everybody's now concerned that we're in the midst of a bear market, which is true, by the way for a lot of the SNP stocks down twenty percent from their high. But I'll get a chance to talk about that. But I want to start today with the piper Jaffray prognostication. Just over a month ago, the standard and Poor's five hundred. Was setting record highs according to carelessly heath now, more than seventy percent of the indexes components isn't a correction or worse. With some high profile names like Twitter, Caterpillar, Ford, an AMD deep in bear market territory. So what are you going to do about it? This. This is really amazing to me because people will come out and say, yes, we're the stocks could fall another ten percent. But they sure as h won't tell you when because they don't know. So what if they do? Another ten percent. When when you're up four hundred percents since the bottom back in March of two thousand and nine what the heck's ten percent. And we'll we recover how long will it? Take for us to recover from another ten percent fall six months a year. I don't know. I do know this that obsessing about recessions, and so forth is not a good thing. You can go a long time without a recession. But art Cashin very highly respected person on Wall Street. Says that every decade since eighteen fifty we've had one. And since the great recession ended in two thousand nine that, obviously means we haven't had one this decade. But in reality. You can go a lot of years without having a recession. Australia hasn't had one since one thousand nine hundred ninety one according to Ben Carlson. Who's a researcher? And does this kind of research? Could we not? The entering into a period of time where we're not gonna have recession. I find it highly unlikely to be honest with you in the near term. I don't know anything about the long-term. But I look at the economic numbers right now, an absent some squirrelly stuff with trades and so forth. That you have to hope that the president figures out a way to worm his way out of the pickle. He's gotten him with China now with Russia and the nuclear treaty and all that stuff. But but so far this dude is figured out. How to do that stuff? He's got the strangest way to negotiate, but it's it's pretty darn effective. So assuming he does and a lot of these companies that are freaking out like, Caterpillar and so forth. Because of tariffs with China, etc. Etc. That too shall pass. No one ever said making money in the stock market was easy. No one ever said that it was easy. And it's not. But over a long time period you look at the charts. I mean, I'm not charter said, okay. I hate looking at charts. I think it's a waste of time to look at charts unless you're looking at one for like the past thirty or forty years and just put your finger at where it started thirty or forty years ago and put your finger where the other finger from the other hand, I should say where it is today. And you will see a nice line that goes from the bottom left to the top, right? That's what the stock market has done, historically. In between times. There have been some pretty wicked selloff. I mean, the pretty darn wicked selloffs we've had some pretty wicked ones over the last several years as a matter of fact. Since the market bottomed in early two thousand nine. There have been corrections of minus sixteen percent minus nineteen point four percent. Minus twelve point four percent minus thirteen point three percent. And mine is ten point two percent. That's in the standard and Poor's five hundred and I can assure you every single time. The pundits came out of the woodwork said. Yep. It's over now. Harry dent probably said, Yep. This is the precursor to Dau three thousand. Which he has actually said in the past that the Dow was gonna crash the three thousand and instead of crashing to three thousand it's stored the twenty five thousand. I mean, he's a smart guy. No question about it. He's from Harvard, and he's not the only one by the way. I saw Ron Paul the other day on some TV commercial, and he's expecting a whole world to go to heck in a hand basket and many many many others. But let me repeat since two thousand nine we've seen the market, correct? By sixteen percent. Nineteen percent. Twelve percent thirteen percent and ten percent. So when I read about piper Jaffray prognostication that we're gonna fall another ten. Oh cares. Who cares? If you were smart enough to get out, and then doubly smart to know when to get back in then perhaps you would care, but I don't. All right, shifting gears to the market as I said, Jeremy Grantham produces his seven-year asset class real return forecasts and as of September thirty two thousand eighteen. Here's what he had to say. Now when I say real return that means after inflation. After inflation. US large-cap stocks after inflation. Minus five point two percent per year. For the next seven years. That doesn't look good. Now, I have to also tell you that Mr. Grantham has also been wrong small-cap, stocks, minus two. High quality stocks minus five. Large companies international minus point five small international companies, minus point four emerging markets. Plus three point two percent. So after inflation three point two percent, which means a nominal return of about five and a half percent. That's the best. You can do according to grant them bonds. Don't look any better. US bonds flat for the next seven years. International bonds. Down minus one point eight emerging market bonds up two point two percent. Cash up one percent. So check this out the emerging markets have how do I say this.