Forecasting | Jonathan Satovsky
Forecasting. Something that people love to do is forecast returns. Well I want to give a little perspective on forecasting based on the latest Vanguard ten-year forecasting plan or their outlook. And they take the fifth percentile, 25th percentile, 50th percentile, 75th and 95th percentile. So their forecast in the ten years ahead are that US equities are going to average 3.8% based on the 50th percentile, and foreign equities will average 7.9% over the next ten years. To give you a little perspective on this, if we go back ten years to 2013, they had forecasted US equities to average 7.7% and foreign equities to average 8.5%. Well, let’s go back and look at the data. Look at the facts from the decade of that forecast. In 2013, the total stock market in the US averaged 11.4%, besting the estimate by 3.7% a year. The foreign markets earned 4.1%, falling short of the midway point by 4.4%. So yeah, it’s within the 25th to 75th percentile standard deviation range. Sorry for the technicals, but you don’t want to use it for precision.
The last stat to give you is that currently we’re in the 98th percentile of historic valuations for large growth companies and in the bottom 2% of valuations for large-value companies. So it’s not a forecast, it’s just stats. So you can take stats to be able to stack the odds in your favor or lean in the direction, but don’t take them as fact on your path to wisdom, wealth, and wellness. Have a great day! https://www.satovsky.com
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Disclosures
This blog post is not intended to be, nor should it be construed or used as, an offer to sell, or a solicitation or offer to buy any securities or interests in any strategy offered by Satovsky Asset Management, LLC (“SAM”). SAM is a registered investment advisor with the Securities and Exchange Commission – for more information see www.adviserinfo.sec.gov. Please remember that different types of investments involve varying degrees of risk, and that past performance is not indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the strategies recommended or undertaken by SAM) will be profitable. Market index information shown herein is included to show relative market performance for the periods indicated and not as standards of comparison. The market volatility, liquidity and other characteristics of SAM’s portfolio composition are materially different from the securities listed on public market indices. Market index information was compiled from sources that SAM believes to be reliable. No representation of guarantee is made hereby with respect of the accuracy or completeness or such data. Opinions are as of date of video and are subject to change. A copy of SAM’s current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request. SAM undertakes no duty to update information presented herein.
Further Reading
Jonathan Satovsky Interviews Rabbi Simon Jacobson
Always on the run
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