Grantham Forecasts Rough Seven Years for Equities, Bonds

Updated on
  • GMO expects negative real returns for both over that period
  • Look beyond U.S. for returns, especially to emerging markets

BlackRock Says Investors `More Cautious' About Buying Dips

Jeremy Grantham isn’t shaking his reputation as a perma-Bear.

Jeremy Grantham

Photographer: Daniel Acker/Bloomberg

His firm, Boston-based GMO, is out with its latest seven-year outlook and it doesn’t make for happy reading. GMO expects the annualized, inflation-adjusted return for U.S. stocks to be negative 4.2 percent over the period. U.S. bonds are forecast to lose 0.5 percent a year while emerging-market stocks, long a GMO favorite, are expected to climb 1.9 percent annually.

“To us, the opportunity set for equity investors looks pretty clear: favor non-U.S. markets, especially value stocks in emerging markets,” said John Thorndike, GMO asset allocation team member. “Additionally, with the Fed continuing to raise short-term interest rates and the potential inflationary effects of tariffs and trade wars, we think investors are well served to keep their duration short.”

Seven Lean Years for Investors

GMO expects negative real returns for stocks, bonds

Source: GMO

Annual percentage real return over seven years

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