Rob Arnott lecture on future returns and methodology

[MichaelB]

Here's a link to an interesting lecture by Rob Arnott. https://vimeo.com/167847506/8f5a43d73f

He explains in some detail the methodology they use to develop their projections for future returns across different asset classes. I'm not promoting the projections, but there is some interest here and I don't recall seeing the methodology presented in such a straightforward manner.

 

[Happyras]

Thank you I agree it was a very straightforward presentation, a nice reinforcement for allocation strategies.

 

[Totoro]

Great lecture! Thank you.

Especially the point about 1.3% growth in earnings for existing companies vs. new companies. And I'm only 15 minutes in

 

[RonBoyd]

Just to pile on:

https://investingcaffeine.com/2016/...encies-give-black-eyes-to-classic-economists/

Markets are efficient. Individuals behave rationally. All information is reflected in prices. Huh…are you kidding me? These are the beliefs held by traditional free market economists (“rationalists”) like Eugene Fama (Economist at the University of Chicago and a.k.a. the “Father of the Efficient Market Hypothesis”). Striking blows to the rationalists are being thrown by “behavioralists” like Richard Thaler (Professor of Behavioral Science and Economics at the University of Chicago), who believes emotions often lead to suboptimal decisions and also thinks efficient market economics is a bunch of hogwash.

 

[NW-Bound]

Very nice presentation.

The presenter first reiterates what other pundits have told us about how future stocks and bonds will be crummy at about 1% real return in the next 10 years. So, how does one beat the market and get a higher return?

He talks about how choosing an active mutual fund manager is not going to help you, and that you have to do it yourself. He concludes with a suggestion that 99% of us will find very difficult to do. That is to have the guts to overbalance into asset classes that have underperformed, not just to rebalance.