Guggenheim says bonds not stocks for next "long term"

[Dd852]

I'm not endorsing this but presenting it as fodder for thought. Guggenheim research just came out with a report that says "While the equity market could continue to perform in the short run, over the long run better relative value will likely be found in fixed income and non-U.S. equities."

The whole report is here

I'm currently 55-45 ... may go to 50-50 at the turn of the year (I have too many capital gains already from going from 60-40!)

 

[Which Roger]

And they're recommending "collateralized loan obligations" as alternatives to stocks and low-yielding treasuries. No thanks.

 

[Blue Collar Guy]

I think the company that wrote the article only(mostly) sells Bonds. If this is the case, then this article is like a sales pitch.

 

[ace8]

our analysis indicates that U.S. Treasurys should outperform equities over the next decade

That is one bold statement!

 

[retired1]

I think the company that wrote the article only(mostly) sells Bonds. If this is the case, then this article is like a sales pitch.

Agreed !

 

[MRG]

Thinking they're more than bonds. Here's a product sheet.


https://www.guggenheiminvestments.com/etf/products

 

[OldShooter]

Anyone who can reliably predict the future will be found on a tropical island somewhere drinking from a glass garnished with an orchid and being hand-fed peeled grapes. They will not be found slaving away at some brokerage house or mutual fund and selling their expertise for peanuts.

This is really all you need to know about reading forecasts.

I saw a hilarious one yesterday.

IOW, Monkeys throwing darts. In January of 2018, one of these monkeys will claim to be a genius.

 

[alaska55]

I think the company that wrote the article only(mostly) sells Bonds. If this is the case, then this article is like a sales pitch.

You're already on the internet just google Guggenheim. I call that open mouth insert foot

 

[bobandsherry]

Anyone know of any site that tracks predictions of companies relative to stocks and bonds forecasts and measures their relative accuracy?

 

[Blue Collar Guy]

Anyone know of any site that tracks predictions of companies relative to stocks and bonds forecasts and measures their relative accuracy?

According to this article he says NO, but he gives a positive shout out to Shiller. The article had many links, I read them all, lots of info, What I got out of it he basically hates all financial gurus.https://financialmentor.com/investm...recasting-hoax-stock-market-predictions/18251

Vanguard I THINK said its very difficult to predict, but I could not understand the majority of the charts and wasn't able to follow the articles points very well. Asset Allocation was their best bet (i think).https://personal.vanguard.com/pdf/s338.pdf

I also would be interested to see if there is a person who tracks the forecasts, I didnt see one that went back more than 1 year. Im following a guy who said last week 2600-2800 for SP500 this year, but he might have been wrong the last 22 years and right this one time.

 

[OldShooter]

Anyone know of any site that tracks predictions of companies relative to stocks and bonds forecasts and measures their relative accuracy?

That would be nice! I hope someone pops in with a link or two.

The closest thing I know of in this area is the chapter "How to drown in three feet of water" in Nate Silver's "the signal and the noise." Here he talks about economic forecasting and he shows a number of charts comparing economic forecasters' predictions to what actually happened. The forecasts are, of course, hopelessly bad. The book is a worthwhile read, though you can skip the first 107 pages if you are not a baseball fan.

One of Silver's most interesting conclusions is that the predictions of highly visible talking heads, famous authors, etc. are more likely to be wrong than predictions made by less visible experts. The reason, he theorizes, is that the talking heads have to provide exciting predictions stated with near certainty in order to keep their jobs. Dull and hedged predictions, which tend to be more accurate, are not good showmanship.

Nassim Taleb is another worthwhile read. Both "The Black Swan" and "Fooled By Randomness" are good, though my favorite is the latter. He can be kind of a lunatic sometimes, but the overall message is thought-provoking.

 

[CaptTom]

Louis Rukeyser used to put little dunce caps on his "elves" that predicted incorrectly.

Anybody else miss that guy?

 

[audreyh1]

Louis Rukeyser used to put little dunce caps on his "elves" that predicted incorrectly.

Anybody else miss that guy?

Ha! Thanks for the flashback!

 

[RetiredAt55.5]

Anyone who can reliably predict the future will be found on a tropical island somewhere drinking from a glass garnished with an orchid and being hand-fed peeled grapes. They will not be found slaving away at some brokerage house or mutual fund and selling their expertise for peanuts.

Yes, that's what I also tell people when they mention "experts" that know what's going to happen.

Further, if I was the person who had this "knowledge" about what was going to happen in the markets, I sure as hell WOULD NOT be sharing it with anyone else!

 

[Blue Collar Guy]

Anyone know of any site that tracks predictions of companies relative to stocks and bonds forecasts and measures their relative accuracy?

This one is old, but very hysterical. Overall they are right less than half the time ,hahahah. But some managed to break 50 %.[/url].https://www.forbes.com/sites/rickfe...cant-accurately-predict-markets/#6b1d695727c0.

https://www.cxoadvisory.com/gurus/

 

[bobandsherry]

Interesting that no one has tracked the predictions from "gurus" and provide a relative grading over time. I've mentally tracked a couple and conclude that the experts just throw a series of darts with hopes of being able to claim "victory" when one finally gets lucky and hits the bullseye.

Just for fun I did a search for what S&P 500 prediction was for this year (S&P ended 2016 @ 2,238) and found this:

Here's what 10 Wall Street pros are predicting for the stock market in 2017

RBC 2,500
J.P. Morgan 2,400
Deutsche Bank 2,350
Citigroup 2,325
Jefferies 2,325
Bank of America 2,300
Credit Suisse 2,300
Evercore ISI 2,300
Morgan Stanley 2,300
UBS 2,300
Goldman Sachs 2,200
Wells Fargo 2,230-2,330

Interesting to see how many predicted 2,300. Wells Fargo predicted a slight drop, heh! RBC is in the ballpark depending on how the last quarter goes.

 

[REWahoo]

Interesting that no one has tracked the predictions from "gurus" and provide a relative grading over time.

Check this out: https://www.cxoadvisory.com/gurus/

... during 2005 through 2012 we collected 6,582 forecasts for the U.S. stock market offered publicly by 68 experts, bulls and bears employing technical, fundamental and sentiment indicators. Collected forecasts include those in archives, such that the oldest forecast in the sample is from the end of 1998. For this final report, we have graded all these forecasts.

 

[JustCurious]

Anyone who can reliably predict the future will be found on a tropical island somewhere drinking from a glass garnished with an orchid and being hand-fed peeled grapes. They will not be found slaving away at some brokerage house or mutual fund and selling their expertise for peanuts.

This is really all you need to know about reading forecasts.

This is the wisest thing I have read in a long time. Amen.

 

[JustCurious]

Interesting that no one has tracked the predictions from "gurus" and provide a relative grading over time.

Actually, the Bogleheads have been doing a contest every year since 2013 to see who can predict the S&P500 closing price at the end of the year. The contest tracks professional predictions as well as individual Boglehead predictions.

https://www.lostoak.com/ls/diehards/contest/default.aspx

 

[bobandsherry]

Check this out: https://www.cxoadvisory.com/gurus/

Yep, BCG posted that just yesterday. That's a bit stale now (through 2012) and doesn't show over time, just the collective grade. And each guru isn't framed around the same time period, example Cramer runs only through 2009 (and started with predictions well before 2005). Saw another that was only measured through 2005 predictions. But I guess it did tell an interesting story that probably still holds today.

 

[bobandsherry]

Actually, the Bogleheads have been doing a contest every year since 2013 to see who can predict the S&P500 closing price at the end of the year. The contest tracks professional predictions as well as individual Boglehead predictions.

https://www.lostoak.com/ls/diehards/contest/default.aspx

Thanks for sharing the link. Interesting to see individual Bogleheads fairing much better than the professionals on current outlook. Interesting to look at the predictions from prior years.

 

[Sojourner]

The biggest obstacle in trying to predict the performance of the S&P or other broad indices is, for lack of a more concise term, the "butterfly effect". No matter how much careful analysis and research and modeling you do, one or two entirely unpredictable, small events can (and usually do) have an enormous impact on the system, leading to vastly different outcomes. This is a fundamental property of complex, nonlinear systems such as capital markets. It's basic, inescapable science that can't be overcome by better modeling or analysis, period.

So, given this, I know that medium-to-long term predictions of market performance are little more than educated guesses and should be taken with a grain of salt.

 

[OldShooter]

... So, given this, I know that medium-to-long term predictions of market performance are little more than educated guesses and should be taken with a grain of salt.

Agreed. I'd propose a small simplification, though:

xx, xxxxx xxxx, x xxxx xxxx xxxxxx-xx-xxxx xxxx predictions of market performance are xxx xxxx xxxx xxxxxxxx guesses xxx xxxxxx xx xxxxx xxxx x xxxxx xx xxxx.

 

[Blue Collar Guy]

Actually, the Bogleheads have been doing a contest every year since 2013 to see who can predict the S&P500 closing price at the end of the year. The contest tracks professional predictions as well as individual Boglehead predictions.

https://www.lostoak.com/ls/diehards/contest/default.aspx

the pros were really off in 2008, I like this link, Ill look at it more over my afternoon coffee.

 

[OldShooter]

This one is old, but very hysterical. Overall they are right less than half the time ,hahahah. But some managed to break 50 %.[/url].https://www.forbes.com/sites/rickfe...cant-accurately-predict-markets/#6b1d695727c0.

https://www.cxoadvisory.com/gurus/

Thanks for the cxo link. Very interesting.

There is another important aspect of forecasting that has not come up here yet: persistence. For example, a guru who was correct with several forecasts in a row is exhibiting persistence. Looking for persistence is the way to differentiate skill from luck.

No joy here however. If you accept active mutual fund managers as gurus, the semiannual S&P Manager Persistence report cards basically says that almost no managers exhibit persistence. From the latest one: " It is worth noting that no large-cap, mid-cap, or small-cap funds managed to remain in the top quartile at the end of the five year measurement period. This figure paints a negative picture regarding long-term persistence in mutual fund returns." (Thought Leadership - Research - S&P Dow Jones Indices)

The S&P SPIVA report card is also a good read. Again, if you accept active managers as gurus, it says that the gurus consistently fail. "Over the one-year period, 56.56% of large-cap managers, 60.69% of mid-cap managers, and 59.55% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively. This is really not too far from the 50/50 cxo data if you consider that the weight of fees will inevitably make the average of all active funds underperform.