Vanguard says you're investing too aggressively?

So is Vanguard predicting a coming buying opportunity?
 
pb4uski said:
... Interesting, I recall in the 1990s prediction that stocks would fall about now because of selling by savers who would be cashing out some for retirement spending about now.
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Yes, I recall that premonition too. I wonder if the reason it has not happened yet is because the boomers control so much of the nation's wealth that they only need to sell off but a small portion of their stash to live comfortably. I certainly did not foresee that I only need a WR of less than 1% to supplement our SS to live very well.
 
pb4uski said:
To be clear, it isn't just "boring old stodgy Vanguard". Many mid single digits. Not the 10% that equity investors are use to. I tend to give them credibility because it isn't naturally in their best interest to go on the record as bearish about future equity returns.

Vanguard 4.2% – 6.2% Valuations remain "significantly above long-term fair value," though slightly improved from 2025.

J.P. Morgan ~6.0% Strong corporate profitability and buybacks (est. +3% contribution) help offset high valuations.

Charles Schwab 5.9% Down from 6.0% last year; market prices have outpaced the growth in corporate earnings forecasts.

Goldman Sachs ~6.0% – 8.0% Shift from valuation-driven gains to "fundamental profit growth." 2026 specific target for S&P 500 is 7,600.

Morgan Stanley Mid-Single Digits Expects a "fragile equilibrium" due to high concentration in mega-cap tech and "razor-thin" margins for error.

BlackRock 5.5% – 7.0% Projects a widening gap between the "Magnificent 7" and the rest of the market; sees tech and industrials as leaders.
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As you can see, I don't keep up with the market predictions. ;-)
 
I did a little AI on it. It said that the reason that it hasn't come to pass is because a large percentage of stocks are held by the wealthiest 10% of retirees and they often have enough income from dividends, pensions, or other sources that they don't need to sell, often passing it on as an inheritance instead. So NW-Bound nailed it. Also, as those assets move to younger generations they are often reinvesting that money back into the market.

Also, in the 1990s, models were more US-centric. Today, the stock market is global. If American Boomers sell, buyers from emerging markets or sovereign wealth funds around the world can step in to fill the gap.
 
corporate.vanguard.com

Vanguard economic and market outlook for 2024: Global summary

An era of higher interest rates will also be an era of sound money. Read more of Vanguard’s 2024 views in this summary.
corporate.vanguard.com corporate.vanguard.com
In 11/2023, about 2.5 year ago Vanguard predicted 4+% to 6+% annually in the next 10 years for US stocks.

Since that time SPY/VOO already made 76%. If we just use 5%, in the middle, we achieved it.

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StockCharts.com's SharpCharts Workbench
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Why do you pay attention to VG?

If you sell soon, please post it. ;)
 
FD1000 said:
corporate.vanguard.com

Vanguard economic and market outlook for 2024: Global summary

An era of higher interest rates will also be an era of sound money. Read more of Vanguard’s 2024 views in this summary.
corporate.vanguard.com corporate.vanguard.com
In 11/2023, about 2.5 year ago Vanguard predicted 4+% to 6+% annually in the next 10 years for US stocks.

Since that time SPY/VOO already made 76%. If we just use 5%, in the middle, we achieved it.

SharpCharts | StockCharts.com

StockCharts.com's SharpCharts Workbench
schrts.co schrts.co

Why do you pay attention to VG?

If you sell soon, please post it. ;)
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That's pretty much my take as well. If equities just go up 5% annually, I am happy. 2% withdrawal plus 3% inflation. If my portfolio remains status quo, I have already made it.
 
For a long time, Vanguard has been forecasting a rotation back into ex-US (international) stocks. This happened to some extent in 2025, and was starting in 2026, before being waylaid by the Iran war. Folks who are concerned about P/E in the US equity market may wish to take Vanguard's advice with modicum of seriousness. Or not... as Vanguard's track record is abysmal.

Bonds vs. equities are a frequent cause of tension here, or maybe if not outright tension, at least spirited discussion. I'll admit it... I really really hate bonds. Absolutely loathe them! Recency bias? Perhaps. Or maybe we're just in a protracted bond bear market, having been in a 40-year bond bull market (1980-2020). Regardless, bonds just don't fit my investment objectives. That is a question of who is the individual investor, what are his or her needs etc. ... it's not a question of market conditions, whether predicted by Vanguard or anyone else.
 
Vanguard's Historic 10-year outlook for US equities:
2013: 6-9%
2014: 6-9%
2015: 5-8%
2016: 6-8%
2017: 5-8%
2018: 4-6%
2019: 3-5%
2020: 3.5-5.5%
2021: 3.5-6%
2022: 2.3-4.3%
2023: 4.6-6.7%
2024: 4.2-6.2%
2025: 2.8-+4.8%
2026: 3.3-5.3%

The lesson for me is twofold: 1) Stay the course; 2) Diversify; and 3) Don't listen to forecasts, they are almost always wrong.
 
The person in the video doesn’t represent Vanguard’s view correctly. He is selling something. I looked for the original Vanguard document he displays and can’t find it, but I did read Vanguard’s updated views on forecast models and portfolios. That can be found here.

What Vanguard is saying is a 40/60 asset allocation will return 6% annualized while a 55/45 will return 6.3%. They call the 55% equity allocation portfolio “constrained” and the 40% equity portfolio “unconstrained”, and most noteworthy is the unconstrained portfolio has substantially lower volatility (7% vs 8.9%). Vanguard doesn’t recommend one over the other.

This is broadly consistent with FIRECalc, where a higher equity allocation leads to a slightly higher annualized return alongside higher volatility.

Here are other Vanguard outlooks and projections for the economy and capital markets. Here and here
 
Diogenes said:
For a long time, Vanguard has been forecasting a rotation back into ex-US (international) stocks. This happened to some extent in 2025, and was starting in 2026, before being waylaid by the Iran war. Folks who are concerned about P/E in the US equity market may wish to take Vanguard's advice with modicum of seriousness. Or not... as Vanguard's track record is abysmal.

Bonds vs. equities are a frequent cause of tension here, or maybe if not outright tension, at least spirited discussion. I'll admit it... I really really hate bonds. Absolutely loathe them! Recency bias? Perhaps. Or maybe we're just in a protracted bond bear market, having been in a 40-year bond bull market (1980-2020). Regardless, bonds just don't fit my investment objectives. That is a question of who is the individual investor, what are his or her needs etc. ... it's not a question of market conditions, whether predicted by Vanguard or anyone else.
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Please don't hate my babies. :peace:
Many investors don’t fully understand bonds—especially the differences across bond categories. For many, “bond funds” simply mean high-quality, broad-market exposure like the Vanguard Total Bond Market ETF (BND).

Over the past 5, 10, and 15 years, BND has delivered approximately 0.22%, 1.74%, and 2.34% annualized returns, which lagged inflation.

In reality, bond categories can differ significantly—often more than stock categories in terms of behavior and risk drivers. With the right allocation, an experienced manager, and active oversight, it’s possible to improve outcomes meaningfully. Even modest improvements of 2–3% annually, combined with disciplined positioning and timing, can lead to substantially better results than a broad, passive approach.

Wait-1, if I made over 11% annually just in bond OEFs in the last 5 and 8.3 years, it means that for 5 years I made 50 times more, and if I assume my 8.3 years to be 10 years, I made 6 times more.

Wait-2, let's test the following for 8.3 years since 1/1/2018 when I started retirement: The Dow, VBIAX (60/40=stocks/bond), 60/20/20 SPY/VXUS/IWM. I beat the DOW and 60/40, but I trailed ll stock portfolio.
But, look at the Max Draw of all stocks portfolio, it was 35%,, mine was less than 1%

1777210128158.png


It gets better.
As stocks become more expensive, future returns tend to moderate—even if volatility remains unchanged. In that environment, certain bond categories can become more attractive, particularly for retirees or those managing larger portfolios. Unlike stocks, which depend on future growth expectations (= pie in the sky), bonds are contractual in nature, offering more defined outcomes.

Early on, I focused only on equities to build my portfolio, but after reaching my first million, I spent more time understanding bonds and the wide range of opportunities within that space. It’s never too late to expand that knowledge.

One pattern I’ve noticed: when a bond category performs poorly and is widely criticized, it often sets up future opportunity. After the mortgage-backed securities (MBS) collapse during the 2008 financial crisis, many investors—and even professionals—avoided the sector. Yet in the years that followed, it delivered strong results. I held 50+% in PIMIX during that period.
I never understood why someone can hold 50-70-80% in SPY but can't do it with other great funds.

Similarly, emerging market bonds were out of favor for years, but by April 2025, they presented a much more compelling opportunity, leading me to allocate 90+% in that direction.

Disclaimer: When I say "bonds," it's never leveraged CEFs.

Lastly, if VG sees about 5-6% annually using 40-50% equities, I will gladly continue to use 90+% bond OEFs with much lower risk/SD.
 
Congrats on your market timing success. It’s the opposite of what Vanguard advises, however, and not what most of us want to attempt.
 
The two easiest market timing mechanisms for the average investor are:
  1. Interest rates
  2. The VIX
 
mrfeh said:
Or choose to not time the market.

The majority of those that do end up doing worse than those that do nothing.
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The majority refuse to learn.
Here is an "easy" timing I have used while staying invested all the time.
Look at wide-range categories, and invest in the top 2 categories; then, select 5 funds with the best risk-adjusted returns and best momo in the last 3-6 months.
I used to do it every 4-6 months and owned the best 5. Within a couple of years I got much better. It took me 3-4 hours at the start every 4-6 months. After a couple of years it took me 1-2 hours. In the last 10 years, just minutes. You can't swim by reading about it; you actually have to swim for hours.

There is no strategy of simply buying and holding an asset or portfolio that guarantees strong risk-adjusted returns across all market environments.
 
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FD1000 said:
Disclaimer: When I say "bonds," it's never leveraged CEFs. ...
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When I say bonds, I essentially mean buying-and-holding VWIUX. CEFs are an amusing topic for banter, but I don't dabble in them. Neither do I actively trade anything.

Your strategy, for which we're still waiting to enjoy any sort of exposition, is evidently an algorithm or heuristic of some kind, to respond to market conditions. Since I don't know anything about it, I won't criticize it. But I will observe that it requires trading, does it not? If that's the case - and please correct me if I'm wrong - for many of us, that's automatically a no-go.

Most of us are interested in reasonable long-term gains, a smattering of stability/confidence, tax-efficiency and minimum effort. Some of these categories will be more important than others, depending on the person. But I will say this: if I sit on my behind while the market falls 50%, that's caustic and painful, but there's strength in numbers. If I do something "clever" causing me to substantially lag the market, then my level of self-annoyance, regret and self-berating will be far higher. You may have the capability, poise, fortitude, elan and skills such that this latter exigency never visits you... in which case, you have my sincere respect. Most of us lack such quiver of talents, or even if we have them, we lack the wherewithal to wield them.
 
mrfeh said:
Or choose to not time the market.

The majority of those that do end up doing worse than those that do nothing.
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Because they trade likely on emotions.
If one would have exited bonds or at least shortened duration when the Fed said they were going to raise rates, they would have been way better off. Same for when rates dropped. Lengthening duration or locking in yield.
As to the VIX, buy when over 30 and you’ll make a killing.
 
mrfeh said:
Or choose to not time the market.

The majority of those that do end up doing worse than those that do nothing.
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Timing the market is ok for discussion AFAIK.
 
This thread isn’t really about market timing. It’s about Vanguard’s modeling and asset class returns, and whether we as investors should consider them in our asset allocations.

There are plenty of other threads on market timing, we don’t need to turn this into one more.
 
Diogenes said:
When I say bonds, I essentially mean buying-and-holding VWIUX. CEFs are an amusing topic for banter, but I don't dabble in them. Neither do I actively trade anything.

Your strategy, for which we're still waiting to enjoy any sort of exposition, is evidently an algorithm or heuristic of some kind, to respond to market conditions. Since I don't know anything about it, I won't criticize it. But I will observe that it requires trading, does it not? If that's the case - and please correct me if I'm wrong - for many of us, that's automatically a no-go.

Most of us are interested in reasonable long-term gains, a smattering of stability/confidence, tax-efficiency and minimum effort. Some of these categories will be more important than others, depending on the person. But I will say this: if I sit on my behind while the market falls 50%, that's caustic and painful, but there's strength in numbers. If I do something "clever" causing me to substantially lag the market, then my level of self-annoyance, regret and self-berating will be far higher. You may have the capability, poise, fortitude, elan and skills such that this latter exigency never visits you... in which case, you have my sincere respect. Most of us lack such quiver of talents, or even if we have them, we lack the wherewithal to wield them.
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Exactly my point. If you invest in simple bond funds, especially VG conservative funds, the results will not be great. The managers can't make changes based on the market environment. If rates go up, this fund will get crushed. If Munis are bad, this fund will be bad. See below 3 years' performance of 3 other funds that crushed VWIUX for performance but also for risk/SD.
As usual, your money, your decision. :)

1777217953933.png



Several funds I would use now, no guarantee, of course. They have ST+longer term very good risk-adjusted performance. See below 3 years chart of ARBIX,SEMIX,HOSIX.

1777218315054.png
 
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HI Bill said:
Vanguard's Historic 10-year outlook for US equities:
2013: 6-9%
2014: 6-9%
2015: 5-8%
2016: 6-8%
2017: 5-8%
2018: 4-6%
2019: 3-5%
2020: 3.5-5.5%
2021: 3.5-6%
2022: 2.3-4.3%
2023: 4.6-6.7%
2024: 4.2-6.2%
2025: 2.8-+4.8%
2026: 3.3-5.3%
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That about sums it up. Why anyone would put credence on what Vanguard says is beyond me. How many times do they have to be wrong?
 
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