This page has been archived and commenting is disabled.

Grantham Releases Updated 7-Year Asset Class Return Forecasts

Tyler Durden's picture




 

Jeremy Grantham, who has been rather vocal in his condemnation of the Fed recently, and has been rather lukewarm in his endorsement of equities as an asset class, has released an updated (as of Oct 31) estimate for 7 Year returns by asset class. And it has bad news for pension funds which have a rather high bogey of about 8% per year. If Grantham is correct the 'new normal' (which is really the normal normal but with the cheap credit spigot taken away due to a new deleveraging regime) also means that pension fund actuarial models have to be scrapped as they will likely not be able to attain the kinds of returns needed to keep them solvent based on capital appreciation expectations. Where Grantham sees the best return potential is in international and emerging equities, presumably on the assumption that decoupling will take place. On the other hand, many are increasingly seeing the possibility of a China topping as a major risk factor. While Grantham is bearish on small cap US equities and sees just a modest outperformance of large caps, what he hates the most are all bonds, where in four out of five categories he see a negative 7 year return. Perhaps it is time for a Rosie-Grantham round table.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 11/18/2010 - 11:35 | 737696 jus_lite_reading
jus_lite_reading's picture

that pension fund actuarial models have to be scrapped as they will likely not be able to attain the kinds of returns needed to keep them solvent based on capital appreciation expectations

AMEN!
Thu, 11/18/2010 - 11:37 | 737709 Bartanist
Bartanist's picture

What the heck is with the "managed timber"? Is that the new tripe he is selling to his clients?

So, growth is out and HFT manipulation of the "US HIgh Quality" names is in?

Thu, 11/18/2010 - 11:50 | 737746 I am a Man I am...
I am a Man I am Forty's picture

"managed timber", what nonsense, housing down and people using less and less paper but timber is going to go up?  Total speculation.

Thu, 11/18/2010 - 11:57 | 737763 jus_lite_reading
jus_lite_reading's picture

Shhhhhh! Don't let anyone know the dirty little secret!

Thu, 11/18/2010 - 12:41 | 737919 ShankyS
ShankyS's picture

If timber will be a top performer, then the other assumptions are out of whack. This makes no sense to me.

Thu, 11/18/2010 - 12:45 | 737935 Whatta
Whatta's picture

What the heck is with the "managed timber"?

 

I think its a euphemism thing. Something to do with Viagra?

Thu, 11/18/2010 - 11:43 | 737725 High Plains Drifter
High Plains Drifter's picture

Too bad the pension funds didn 't buy gold and lots of it.

Thu, 11/18/2010 - 11:50 | 737748 tmosley
tmosley's picture

Yeah, people might actually have been able to retire without eating dogfood.

Thu, 11/18/2010 - 12:00 | 737772 jus_lite_reading
jus_lite_reading's picture

Aren't social secuirty beneficiaries supposed to be getting a 25% COLA?

LOL

Thu, 11/18/2010 - 12:07 | 737802 glenlloyd
glenlloyd's picture

I think it was 25% more dogfood...iirc

Thu, 11/18/2010 - 11:55 | 737757 the rookie cynic
the rookie cynic's picture

How 'bout including a forecast for real estate, US dollar, precious metals, soft commodities, and oil? Stock and bonds are not the only games in town after all. These forecast are interesting, but rather meaningless in the overall context of general economic upheaval.

Thu, 11/18/2010 - 11:57 | 737764 Pladizow
Pladizow's picture

Why exclude gold?

I dont know if John Williams will agree with a 2.5% inflation assumption?

Thu, 11/18/2010 - 12:02 | 737779 repete
repete's picture

Well there is not enough gold for everyone to invest in, period!

Thu, 11/18/2010 - 12:11 | 737795 Pladizow
Pladizow's picture

Please further explain your comment.

What is there enough of, for EVERYONE to invest in?

And what asset class does EVERYONE invest in?

Thu, 11/18/2010 - 12:42 | 737885 repete
repete's picture

If everyone tried to exchange their rapidly devaluing paper for gold that would drive the price way too high for paper holders to feel comfortable with.  i think there may be some of that discomfort going on in silver right now!

Fri, 11/19/2010 - 01:08 | 740302 bingocat
bingocat's picture

Answer to the first question is "Themselves". It is, unfortunately, not the answer to the second.

Thu, 11/18/2010 - 12:02 | 737781 RobotTrader
RobotTrader's picture

CPI came in at one of the lowest readings ever.

And crude oil just cratered $5 in a matter of days, so next month's CPI will probably be even lower.

Thu, 11/18/2010 - 12:31 | 737883 TheProphet
TheProphet's picture

What is this CPI based on? Clearly not gas, milk, and cereal.

Thu, 11/18/2010 - 12:43 | 737928 ShankyS
ShankyS's picture

CPlie you mean. More BLS BS. Nothing can be trusted.

Thu, 11/18/2010 - 12:00 | 737774 RobotTrader
RobotTrader's picture

A little too late for that report to come out.

Many stocks are already up huge since the 2008 lows.

Once in a lifetime gain in stocks has already happened.

Deep cyclicals like CAT which are already 4-baggers

$20 to $80

Thu, 11/18/2010 - 12:10 | 737806 6 String
6 String's picture

Jim Chanos said something interesting earlier this year when he predicted with his best guess that China's real estate bubble would probably start to unwind in late '10. Something to think about:

"A lot of people are going to be rethinking their entire investment approach when China's credit bubble pops."

He also waxed that "The ultimate defination of a bubble is when the cash flows can't service the debt."  I wonder what the owner's equivalent rent is in mainland China? I'm guessing it's not good, as we are hearing real anecdotal evidence right here on ZH.

Chanos should be put on that round table, while he agrees with Rosie--his bar bell is short commodities being ramped up in the preposterous China growth story and anything Netflix.

If Chanos is right, I also expect to see Gold temporarily punished, along with silver? Thoughts?

Thu, 11/18/2010 - 12:14 | 737818 goldmiddelfinger
goldmiddelfinger's picture

If Jim Chanos is right, the ChiComms won't be letting his investor's money out of the country.

Thu, 11/18/2010 - 12:12 | 737810 goldmiddelfinger
goldmiddelfinger's picture

The immenient emerging market implosion will destroy him and his models. Retirement for you Grantham. You've jumped the shark w Maria and your 15 minutes of celebrity have been brittle indeed.

Thu, 11/18/2010 - 12:21 | 737839 Superdrol
Superdrol's picture

What about the asset class that takes opposite trades against Nic Lenor and David 'Double Chin' Rosenberg that have been dead wrong about the gloom and doom which will not probably come for another 15 years and 9,999,999 points later ?

 

That indeed has been the best securitized asset YTD.

Thu, 11/18/2010 - 12:25 | 737858 HarryWanger
HarryWanger's picture

Exactly. Lots of fools lost money listening to those guys. This isn't rocket science. We had our "great recession" that was the disaster they all were looking for. Great. Move on. Why look silly trying to predict another "disaster"?

Thu, 11/18/2010 - 12:35 | 737899 CrashisOptimistic
CrashisOptimistic's picture

Dood, I don't quite know what world you're living in, but it's hard to think in terms of "another" disaster while this one still has S&P levels equal to 1998.  That's 12 years of nothing.  The real question is, with oil priced 4 or 5 times higher than 1998, why in hell do you imagine that NOW, this point in time, is what turns around 12 years of nothing when the lifeblood of civilization is leaking away.

Thu, 11/18/2010 - 13:52 | 738161 Bay of Pigs
Bay of Pigs's picture

No doubt. And not only that, many refuse to see how stocks have been literally destroyed against gold. Check out the Dow/Gold ratio. Silver is just now catching up, and leading gold. It has a LONG way to go from here. $50 next year wouldn't surprise me as physical shortages and delivery delays hit hard.

Thu, 11/18/2010 - 12:22 | 737846 paddy0761
paddy0761's picture

I can't see the forest for the trees.

Thu, 11/18/2010 - 12:26 | 737862 Don Mattingly
Don Mattingly's picture

This is garbage. Look at his plus minus figures at the bottom. How about I throw some shit on the wall see what sticks and put it on a chart?

Thu, 11/18/2010 - 12:46 | 737943 ShankyS
ShankyS's picture

LOL, even I could pitch a perfect game with those +/- figures. Hell, at this time anyone forecasting past their nose is a fool.

Thu, 11/18/2010 - 14:12 | 738223 Thunder Dome
Thunder Dome's picture

Grantham is a stud.  His record speaks for itself.

Thu, 11/18/2010 - 16:07 | 738686 jus_lite_reading
jus_lite_reading's picture

David Davidowitz is right on...

Fri, 11/26/2010 - 23:37 | 756876 ownself
ownself's picture

Puma Shoes | Men's Puma Shoes | Women's Puma Shoes | Cheap Puma Shoes | Discount Puma Shoes | Men's Puma Future Cat Shoes | Men's Puma Future Cat 0118 | Men's Puma Future Cat 106 | Men's Puma Future Cat 603 | Men's Puma Future Cat Ferrari | Men's Puma Future Cat Low 829 | Men's Puma Future Cat 825 | Men's Puma Future Cat 601 | Men's Puma Future Cat 103 | Men's Puma Future Cat 105 | Men's Puma Future Cat 602 | Men's Puma Future Cat Carve | Men's Puma Future Cat GT Ferrari | Men's Puma Ferrari Shoes | Men's Puma Ferrari 101 Shoes | Men's Puma Ferrari 102 Shoes | Men's Puma Ferrari 694 Shoes | Men's Puma Ferrari 916 Shoes | Men's Puma Ferrari 910 Shoes | Men's Puma Ferrari 695 Shoes | Men's Puma Ferrari 918 Shoes | Men's Puma Ferrari Cat Big | Men's Puma Fur Shoes | Men's Puma Fur I Shoes | Men's Puma Fur II Shoes | Men's Puma Baylee Future Cat II | Men's Puma Baylee Future II 703 | Men's Puma Baylee Future II 704 | Men's Puma Drift Cat Shoes | Men's Puma Drift Cat 098 Shoes | Men's Puma Drift Cat II Ferrari | Men's Puma Drift Cat II SF Shoes | Men's Puma Mummy Shoes | Men's Puma Mummy High Shoes | Men's Puma Mummy II Shoes | Men's Puma Mummy Low Shoes | Men's Puma Speed Cat Shoes | Men's Puma Speed Cat 099 Shoes | Men's Puma Speed Cat Big Shoes | Men's Puma Fluxion II Shoes | Men's Puma Grit Cat III Shoes | Men's Puma Wheelspin Shoes | Men's Puma Repli Cat III | Men's Puma Tour Cat Lo L | Men's Puma Trionfo Low Baylee | Men's Puma Trionfo Tour SF | Men's Puma Kimi Raikkonen | Men's Puma Brazil Edition Shoes | Men's Puma Doshu Combat Shoes | Men's Puma Pace Cat 691 | Men's Puma Ducati Shoes
??????????????????????????????????????????????????????????????????????????????
WoMen's Puma Future Cat Shoes | WoMen's Puma Future Cat 103 | WoMen's Puma Future Cat 105 | WoMen's Puma Future Cat 106 | WoMen's Puma Future Cat Carve | WoMen's Puma Future Cat Low 829 | WoMen's Puma Future Cat 825 | WoMen's Puma Future Cat GT | WoMen's Puma Future Cat Big | WoMen's Puma Ferrari Shoes | WoMen's Puma Ferrari 102 | WoMen's Puma Ferrari 910 | WoMen's Puma Fur Shoes | WoMen's Puma Fur I | WoMen's Puma Fur 889 | WoMen's Puma Baylee Future Cat | WoMen's Puma Baylee Future 703 | WoMen's Puma Baylee Future 704 | WoMen's Puma Speed Cat Big | WoMen's Puma Mummy Low Shoes | WoMen's Puma Drift Cat II | WoMen's Puma Repli Cat III | WoMen's Puma Fluxion II Shoes | WoMen's Puma Vectana Running | WoMen's Puma Grit Cat III | WoMen's Puma Wheelspin Shoes | WoMen's Puma Tour Cat Lo L | WoMen's Puma Sandals Shoes | WoMen's Puma 2 On Behalf | WoMen's Puma 4 On Behalf | WoMen's Puma 5 On Behalf | WoMen's Puma Princess Baller | WoMen's Puma BWM Sandals

Do NOT follow this link or you will be banned from the site!