13X Better Than U.S. Stocks
U.S. stocks are dead.
According to a major analysis of expected returns, large-cap U.S. stocks could be dead money for years to come.
Don’t let that get you down.
Because another group of stocks have been left-for-dead for so long, they offer historic potential returns from here.
Check it out below.
Take What The Market Gives You
GMO is a major investment management firm.
The firm – formerly Grantham Mayo & Otterloo – was founded in 1977 and has been through all the major up and downs in the market.
It succeeded too. GMO has an estimated $65 billion in assets under management.
You don’t get that kind of size without performance.
But GMO doesn’t just help institutional investors and the super-rich make money.
It does a great service for individual investors too.
Every quarter GMO publishes an historical analysis of multiple different asset classes, valuations for each, and the expected returns over the next seven years based on those valuations.
It’s called the GMO 7-Year Asset Class Forecast and it’s essential reading for individual investors.
Now, the forecast isn’t good for timing the market.
Bubbles run far above historical highs and crashes drop below historical lows, which makes the forecast look “wrong” from time to time.
But it gives you a great starting point on what will do well and what’s extremely risky.
Take a look at the chart from a year ago to see what I mean.
This is the GMO Asset Class Forecast From Q4 2021:
It shows how extreme the post-pandemic bubble-in-everything had gotten.
The expected returns over the next seven years were negative for nearly everything.
U.S. large caps and small-cap stocks posed exceptional risks.
The expected annual return on U.S. large-caps was a negative 7.3%.
Small cap stocks were almost as bad. The expected annual return on those was a negative 6.5%.
Even bonds were poised for negative returns.
It was ugly.
Looking back though, that’s exactly what happened.
Stocks and bonds were so overvalued they got crushed when the downturn came.
But here’s the good news.
The current downturn has been so extreme, there are historic gains potential in some assets.
Here’s the latest GMO Asset Class Forecast From Q3 2022 which shows a much rosier picture:
The downturn of 2022 has wiped away nearly all the fluff in U.S. stocks and it has crushed international and emerging markets stocks.
That’s why the expected returns of emerging markets is now up to 13 times higher than U.S. large cap stocks.
International and emerging markets were looking good before 2022, now they’re downright fantastic.
If you are looking to put the odds in your favor, these are the spots to do it right now.
