Question on Vanguard 10 Year Market Forecasts

[RenoJay]

Actually two questions...

Every year Vanguard puts out a forecast where they go over economic data, PE ratios of the market, etc. and forecast expected stock returns over the following decade. My two questions are:

1. Has anyone seen a summary that compiles these forecasts (i.e. shows what the 10 year average expected return was) for each year and then compares those to the actual results?

2. Do Vanguard's estimated returns include dividends? (i.e. is it a "total return"?)

FYI, their 2018 estimate puts 10 year U.S. stock returns in the 4% range.

 

[NW-Bound]

I don't know about Vanguard formal position, but our friend Kgtest shared what Bogle said recently about future stock returns.

Kgtest's post is here: http://www.early-retirement.org/forums/f44/so-i-bought-s-and-p-500-2500-puts-94093.html#post2120729

Bogle has been saying the same thing for the last few years, so it is nothing new. This is the excerpt from the above link.

Over the next 10 years, Jack sees nominal corporate profits growing at an average 4% a year, while investors also collect 2% in dividends, giving them a potential total return of 6% a year. But he says, “It would probably take a 25% drop [for the stock market] to get to its normalized value.”

He sees investors surrendering two percentages points a year to falling price-earnings ratios over the next decade, leaving them with a nominal annual return of 4%—which shrinks to just 2%, once you factor in inflation. Meanwhile, over the next 10 years, he expects bond investors to earn a nominal 3½% a year, or 1½% after inflation.

“Everything that’s happening today is great for the short term and terrible for the long term,” Jack cautions. “We’re on dangerous ground and yet the [stock] market goes blithely on.”

Faced with low expected returns, what’s his advice? “You better save more money,” Jack counsels. “You better get more costs out of the equation.”