GMO Shows Why BTFD In Small Caps Is Dead (In 1 Simple Chart)

Tyler Durden's picture

The future for US Small Caps is not a bright one, according to GMO. While High Quality US equities are expected to return a meager 2.1% annually over the next 7 years, Small Caps have become so egregiously over-valued that GMO's forward-looking estimate of Small Cap performance is a dismal 5.0% annual loss over the next 7 years (compared with a 6.5% annual return average for broad US equities). It seems the BTFD easy money has been made in this bubble...



Source: GMO

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
q99x2's picture

Ban GMO.

Sue Bill and Melinda Gates for genocide.

Dr. Engali's picture

Feeling wealthy yet?

TammanyBrawl's picture

More like WTF day?
CPI shows inflation. Metals showing deflation. WWIII warming up in Eastern Europe . China a huge question mark. Market analysts all flashing red warning lights.....and futures are still green!!
I feel like I'm taking crazy pills.

Bill of Rights's picture

BRICS aim to finish development bank preparations by July summit
| Reuters


Some officials from the Group of 20 advanced and emerging economies have suggested moving ahead on the reforms without the United States, although U.S. approval would be necessary for any major decision to go forward because of Washington's controlling share of IMF votes.

Ralph Spoilsport's picture

Got rid of Small Cap years ago. Even a dog knows when it's being kicked.

Rainman's picture

Timber, bitchez ! Grab your ax !

AbbeBrel's picture

With beef prices at an all time high - perhaps it is also time to be 


Long Udder!!

love-zero's picture

If you saw Jeremy's historical track record on these 7 seven year projections you would ignore this analysis completely.

Best returning asset class is timber in an electronic age where new home starts have been disappointing for 5+ years, Need I say more!

ShrNfr's picture

With all due respect to Grantham and Inker (I know them both personally), their 5 year asset class returns have been total trash for the past 20 years. I can't take them seriously.


taketheredpill's picture



Then how do they keep getting assets?  I recall they lost 30% of their clients when they under-weighted equities during 1999/2000 Bubble, but have grown since then.



taketheredpill's picture



Long half section of Pine.  Just have to wait 10 years though....

Comte d'herblay's picture

Which vindicates the fact that the only reason the market is being held in relative neutral, for the next 50 years, is to allow orderly liquidation of the securities held in all the pension and other insurance accounts, likley in the multiquadrillion range.  

Lord Blankfiend has to sell a coupla billion dollars of shares he has been 'managing'  for CALPERS, and Jamie (this is not a man's name) buys them for eesentially the same price that Blankfiend wants, with the FED waiting down at Tim Horton's to give Jamie for any  shares they don't want right now. And there goes part of the $85,000,000,000 that was given to the primary dealers in February. 

And on, and on, and on.....

THAT's why a 2% 'growth rate' is predicted.

Without the FED, to absorb all the sold off securities to fund with its new FRNs, for donuts for Alan Greenspan, and Bill clinton's pension payments each month, you can see where there is only one outcome, hint: