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Post by chang on Jul 2, 2023 16:30:34 GMT
See their latest 7-Year Forecast below. They're very positive on EM/EM Value. Of course, they have been wrong before; possibly more often than right. However, it gives me some comfort with my oversized foreign allocation, although currently my foreign is 100% developed, 0% EM. I've been checking into Avantis Funds, and liking what I'm seeing. They seem to be "DFA Plus". They have an EM Value fund, ticker symbol AVES. I wonder whether it's worth a flutter? (Note: per M*, it has a 4.15% yield.)  |
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Post by Deleted on Jul 2, 2023 19:48:09 GMT
These guys have been wrong for as long as I can remember. I personally would not base my decision on their forecast.
But one could have other good reasons and use them for confirmation I would guess. Though using them for confirmation also does not sound logical.
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Post by steadyeddy on Jul 2, 2023 20:24:04 GMT
chang , I have been getting increasingly concerned with the concentration risk in the US stock market by just a handful of stocks - and that has continued for over a decade now. So, in general, I would like to think that GMO forecast is correct. In principle, EM definitely has advantages of demand (population) and supply (of talent) for goods and services relative to developed xUS. The wild card is currency movements. China and India dominate the EM (as you know): China has many factors going against it; while India though very favorable has allowed its currency to depreciate rapidly against USD. And - if inflation proves to be stubborn and persistent over many years - who knows what happens. Net net, I personally think the forecast is a crap-shoot.
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Post by retiredat48 on Jul 2, 2023 21:52:17 GMT
Just note the seven year projected returns are REAL RETURNS...net after inflation deducted. And they are primarily based on a "return-to-the-mean" theme.
R48
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Post by catdog on Jul 3, 2023 2:34:20 GMT
Steady,
I also think of political upheaval as a wildcard with EM. One reason why I usually stick with US.
Catdog
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Post by steadyeddy on Jul 3, 2023 2:51:56 GMT
Steady, I also think of political upheaval as a wildcard with EM. One reason why I usually stick with US. Catdog , Yeah but EM has got used to accessing capital markets across the world so I would surmise that political upheaval could be isolated or managed. |
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Post by chang on Jul 21, 2023 16:18:32 GMT
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Post by Fearchar on Jul 21, 2023 17:44:44 GMT
Interesting....
15 year inflation assumption is 2.3%
GMO expects nothing will beat the long term US equity returns of 6.5% after inflation.
US equity holders may see real losses.
And cash is expected to beat everything domestically.
Cash holders that can't do math may think they are earning 4% on average over the next 7 years.
Real return on cash is expected to be only 1.7%.
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Post by steadyeddy on Jul 21, 2023 20:59:44 GMT
Has GMO ever been correct with their forecast? Most forecasts - just like quarterly earnings estimates - get revised often just like weather forecast.
Stick to your own knitting and AA.
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Post by newtecher on Jul 22, 2023 0:01:19 GMT
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Post by steadyeddy on Jul 22, 2023 0:07:34 GMT
newtecher, interesting. So, Dec 1999 to Dec 2009 included two ugly bear markets... and their forecast seemed to have played out for the most part.
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Post by steadyeddy on Jul 22, 2023 0:09:40 GMT
chang, I am big into PIMIX which has a decent dose of EM debt in their strategy at the moment - so I am good there. As for EM equity, I am undecided at the moment.
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Post by retiredat48 on Jul 22, 2023 3:29:13 GMT
chang,...I have owned EM debt from time to time. The value comes from a decent interest rate; but more importantly, taking advantage of a falling dollar. The currency exchange is a key component of returns. We just had strong dollar for several years; turning around now?? Down-trending dollar--uptrending EM bond returns. R48
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Post by retiredat48 on Jul 22, 2023 3:34:25 GMT
The GMO returns are based on a "return to the mean" approach. The poor results of last decade+ to me, are that one sector has had outstanding growth, with no return to any mean. And that is large cap high tech. And the actual corporate growth of the FANG etc has been phenomenal.
Note same high tech may have another huge decade with the next revolution of Artif. Intell.
R48
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Post by retiredat48 on Jul 22, 2023 3:43:59 GMT
An anecdote re return to the mean, to think about.
There is a mantra that criticizes anyone who says "this time it is different." However, at times it is different. Go back and look at stock dividend returns during the late 1950's. The typical yield was 5+%. Then a decade of stock growth/ownership occurred, and by the late 1960" the avg dividend was about 2-2.5%. It never looked back. No return to the mean--this time, it was different.
My "most likely outlook" is that by the end of the next decade, stocks may be in such high worldwide demand as inflation fighters, and EPS growth, that yields may drop to 1% average.
R48
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Post by chang on Jul 22, 2023 6:01:26 GMT
chang,...I have owned EM debt from time to time. The value comes from a decent interest rate; but more importantly, taking advantage of a falling dollar. The currency exchange is a key component of returns. We just had strong dollar for several years; turning around now?? Down-trending dollar--uptrending EM bond returns. R48 I thought most EM debt is dollar denominated (or in currencies pegged to the dollar such as the HKD, AED, etc.) — in which case, there are no exchange rate influences. ?? |
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Post by roi2020 on Jul 22, 2023 6:14:26 GMT
Many people in the investment industry are currently bullish about EM.
Louis-Vincent Gave, chief executive of Hong Kong–based Gavekal Research, recently spoke with Barron's.
"There is a boom in emerging markets, but investors are missing it because China isn’t doing well [it accounts for 30% of the MSCI Emerging Markets index].
Indian, Brazilian, and Indonesian purchasing-manager-index readings are at record highs.
For all the talk about AI and the Nasdaq, since the start of Covid, stock markets in Brazil, Argentina, Mexico, India, and Indonesia have outperformed the U.S.
And their bond markets are crushing the U.S. Treasury market."
"The next bull market has already started: It’s in emerging markets ex-China.
Long-lasting bull markets are usually driven by rising currency and falling real interest rates—a great combination for asset prices to rerate.
Today, if you’re looking for a place where you’re making money on the currency, bonds, and equities, it’s not in the U.S. or in Europe, but rather, emerging markets."
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Post by Chahta on Jul 22, 2023 11:50:03 GMT
Telling the future 7 years ahead? Unlikely to be accurate.
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Post by steadyeddy on Jul 22, 2023 12:56:10 GMT
chang ,...I have owned EM debt from time to time. The value comes from a decent interest rate; but more importantly, taking advantage of a falling dollar. The currency exchange is a key component of returns. We just had strong dollar for several years; turning around now?? Down-trending dollar--uptrending EM bond returns. R48 I thought most EM debt is dollar denominated (or in currencies pegged to the dollar such as the HKD, AED, etc.) — in which case, there are no exchange rate influences. ?? I do not think that assumption is correct. Dollar denominated bonds still need to be paid back by converting local currencies into $ (or use the countries' $ reserves). Either way currency impacts are still in place. |
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Post by steadyeddy on Jul 22, 2023 12:58:29 GMT
Telling the future 7 years ahead? Unlikely to be accurate. You are 100% correct. Given so many wildcards such as global debt, inflation, de-globalization, wars, $ reserve currency status, pandemics, and so on and so forth |
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Post by chang on Jul 22, 2023 12:59:17 GMT
Telling the future 7 years ahead? Unlikely to be accurate. Yes and no. Some things are more certain in the long term than the short term. Will the market be higher tomorrow (50% probability) or in 15 years (99.9% probability)? |
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Post by Chahta on Jul 22, 2023 14:43:59 GMT
Just this year the talking heads were claiming the US market was doomed to 6-7% for the next decade. Here we are up 18% for half year. When will China invade Taiwan? Is there a pandemic coming in 2024? I guess I must settle for market returns holding my measly 10% ex US.
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Post by retiredat48 on Jul 22, 2023 14:44:27 GMT
Telling the future 7 years ahead? Unlikely to be accurate. You are 100% correct. Given so many wildcards such as global debt, inflation, de-globalization, wars, $ reserve currency status, pandemics, and so on and so forth Ah, but one has NO CHOICE but to think about the future. For the alternative is to invest blindly. With money comes responsibility; one cannot duck that it requires decisions and choices. That is what we have been teaching grandkids since their age 10, by giving them a share of some famous companies, and explaining why. And taking RMDs requires a form of annual "market timing"...heaven forbid! R48 |
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Post by retiredat48 on Jul 22, 2023 14:47:44 GMT
chang ,...I have owned EM debt from time to time. The value comes from a decent interest rate; but more importantly, taking advantage of a falling dollar. The currency exchange is a key component of returns. We just had strong dollar for several years; turning around now?? Down-trending dollar--uptrending EM bond returns. R48 I thought most EM debt is dollar denominated (or in currencies pegged to the dollar such as the HKD, AED, etc.) — in which case, there are no exchange rate influences. ?? Investor makes a choice. You can invest in HEDGED, or unhedged EM bond funds. Most are unhedged, as it costs a little more to own hedged EM FI. Some funds have the latitude to hedge or not...a third choice. I have tended to invest in this third choice with Doubleline. The periodic manager reports usually give and discuss the hedged percentage of their portfolios, and reasons why. Google "Luz Padilla", EM FI manager. R48 |
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Post by Chahta on Jul 22, 2023 14:47:59 GMT
I don’t consider it investing blindly. We know the general direction and status of interest rates. We know of a possible recession. We know the market will recover and generally goes up over time. Yep, sounds like my 50/50 is all set.
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Post by chang on Jul 22, 2023 15:13:14 GMT
retiredat48: I understand hedged vs. non-hedged funds. I was just observing that (I thought) most EM bonds were USD denominated or USD-pegged. I may be wrong!
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Post by bigseal on Jul 22, 2023 18:11:28 GMT
GMO is a clown show. Hope no one on this forum is foolish enough to spend any time reading GMO’s market forecast predictions. Forecasts are a waste of time.
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Post by retiredat48 on Jul 23, 2023 3:27:45 GMT
chang ,@waffle2 , steadyeddy , retiredat48 , catdog , Fearchar , newtecher , roi2020 , Chahta , bigseal , bigseal, you posted: "GMO is a clown show. Hope no one on this forum is foolish enough to spend any time reading GMO’s market forecast predictions. Forecasts are a waste of time." R48 reply: So I take it when you disagree with very large, successful organizations, they are "clown shows." And forum members who stay aware of GMO and the prediction table, are "foolish"...and forecasts are clearly a "waste of time." Hmmm... I see you have only made eleven (brief) one-to-two sentence posts in the last year. So I went back and read them. Here are the operative words from the each of your posts: -- "Many people collect funds which is total nonsense."
--Just because they own an index fund doesn’t mean it is a really meaningful part of their total portfolio.
--Why would anyone care about what Hussman says or thinks. The guy is a total stooge.
--Warren Buffett and Charlie Munger would say concerning yourself with downside capture is total nonsense.
--The only important factor is total return. Never understood why people make this so complicated. Really couldn’t be any simpler.
-- forget about volatility? Always better ... to think long term.
--Just because the stock (ETF) price wiggles a lot doesn’t mean it is more risky.
-- We’ve always been 90%+ stocks and will never change.
--I’ve basically never owned bonds my entire 50+ years of investing,"------------------------------------------------- In summary, it appears you don't like people who collect mutual funds or ETFs, or own index funds or invest in fixed income (bonds); it's nonsense to worry about the downside capture/risk; investors with divy-themed portfolios are making their life "complicated."; and dumb to worry about volatility. All accompanied by pejorative adjectives. Gee, that is a very large percentage of all who post in this forum. Myself included. So to be clear, I for one will not be replying to your future posts, and will simply reference this thread post, if pressed as to why in the future. R48
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Post by bigseal on Jul 23, 2023 8:33:45 GMT
chang ,@waffle2 , steadyeddy , retiredat48 , catdog , Fearchar , newtecher , roi2020 , Chahta , bigseal , bigseal, you posted: "GMO is a clown show. Hope no one on this forum is foolish enough to spend any time reading GMO’s market forecast predictions. Forecasts are a waste of time." R48 reply: So I take it when you disagree with very large, successful organizations, they are "clown shows." And forum members who stay aware of GMO and the prediction table, are "foolish"...and forecasts are clearly a "waste of time." Hmmm... I see you have only made eleven (brief) one-to-two sentence posts in the last year. So I went back and read them. Here are the operative words from the each of your posts: -- "Many people collect funds which is total nonsense."
--Just because they own an index fund doesn’t mean it is a really meaningful part of their total portfolio.
--Why would anyone care about what Hussman says or thinks. The guy is a total stooge.
--Warren Buffett and Charlie Munger would say concerning yourself with downside capture is total nonsense.
--The only important factor is total return. Never understood why people make this so complicated. Really couldn’t be any simpler.
-- forget about volatility? Always better ... to think long term.
--Just because the stock (ETF) price wiggles a lot doesn’t mean it is more risky.
-- We’ve always been 90%+ stocks and will never change.
--I’ve basically never owned bonds my entire 50+ years of investing,"------------------------------------------------- In summary, it appears you don't like people who collect mutual funds or ETFs, or own index funds or invest in fixed income (bonds); it's nonsense to worry about the downside capture/risk; investors with divy-themed portfolios are making their life "complicated."; and dumb to worry about volatility. All accompanied by pejorative adjectives. Gee, that is a very large percentage of all who post in this forum. Myself included. So to be clear, I for one will not be replying to your future posts, and will simply reference this thread post, if pressed as to why in the future. R48 R48, I never said anything negative about index funds. My statement was just because you own an index fund, or any fund or stock for that matter, doesn’t mean it is a significant enough position to make a meaningful difference in your portfolio performance. It isn’t necessary that you agree with me. But have fun proving me wrong based on creditable evidence. |
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Post by chang on Jan 23, 2024 22:19:07 GMT
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