Quarterly Market Review for Q3 - 2023. (See attached)
Quick overview (ending as of September 2023):
US Stock Market/Bonds Inter. Developed Stocks/Global Bonds
Q3 2023 -3.25% -3.23% -4.10% -0.78%
1 year 20.46% 0.64% 24.00% 2.99%
5 year 9.14% 0.10% 3.44% 0.83%
10 year 11.28% 1.13% 3.84% 2.30%
but that risk can be significantly mitigated through due diligence in selecting the insurance carrier and possibly purchase more than one from different carriers
That used to be a good tactic, but these days, with the private equity firms snapping up pensions, permanent life insurance, and annuity policies from the carefully selected "good" insurance companies, not so much. It just feels like a disaster in the making, as the off-shore PE companies don't have to follow the rules laid out for enduring these products remain viable. You have no control over your money (actually, not your money any more, but a promise you bought), and that's not good.
Quarterly Market Review for Q4 - 2023. (See attached)
Quick overview (ending as of December 2023):
US Stock Market/Bonds Inter. Developed Stocks/Global Bonds
Q4 2023 12.07% 6.82% 10.51% 5.36%
1 year 25.96% 5.53% 17.94% 8.32%
5 year 15.16% 1.10% 8.45% 1.50%
10 year 11.48% 1.81% 4.32% 2.80%
1st Quarter 2024:
Developed market equities had a strong first quarter thanks in large part to the performance of growth stocks, which returned 10.3%.
This was especially true in the US, where the S&P 500 rose 10.6%, outperforming most of its peers, driven once again by the stellar performance of the ‘magnificent seven’ stocks which posted earnings growth of 56% during Q4 2023, helping to lift overall index earnings growth to 8%.
However, the best performing market of the quarter was once again Japan. The Topix ended up 18.1% in the first three months of the year, despite the Bank of Japan beginning normalisation of its monetary policy in March. The central bank announced an end to its negative interest rate policy, yield curve control, and its purchases of equity exchange traded funds and real estate investment trusts.
While some European equity indexes, such as the French CAC 40, reached new all-time highs, European equities overall continued to lag the US and Japan, with the MSCI Europe ex-UK Index posting returns of 9.7%. European stocks did, however, end the quarter on a brighter note. Global investors, concerned about the concentration risks of the US market, may be starting to turn to Europe where cheaper valuations and a potential shrinking of the economic growth gap relative to the US are making the region look more attractive.
Quarterly Market Review for Q1 - 2024. (See attached)
Quick overview (ending as of March 2024):
US Stock Market / Bonds Inter. Developed Stocks/Global Bonds
Q1 2024 10.02% -0.78% 5.59% 0.58%
1 year 29.29% 1.70% 15.29% 5.92%
5 year 14.34% 0.36% 7.48% 1.03%
10 year 12.33% 1.54% 4.81% 2.64%
US Stock market continues to kick International developed stock markets butts, Global bonds continue to do better then US, nothing new here. So what happened to those 2020-01 predictions that International developed stock markets are going to do better then US??????????????????????????????? Developed stock markets (sans US) would have to have phenomenal returns over the next 6 years just to catch up to the US returns.
@pizzaman I think that (most of) the CMA predictions are presented as annualized return averages over 10 years or more. So I suppose that the appropriate "back test" comparison should actually consider the average return predictions made back in say 2013 and 2014 to now?
Attached are the Horizon Actuarial (HA) surveys for that period I could find. The survey participants in that time frame are fewer in number than the more recent HA surveys. The assumptions on the return calculations are indicated in the survey reports (attached). (Not sure what the return assumptions are (nominal vs real, geometric, etc.) for the long term chart in the Merrick Wealth slide deck you provided.) There also are asset class definition differences to be aware of...Anyway, here is a synopsis:
10 year Averages US Stock US Bond xUS Dev. Stock Global Dev. Bonds
2013 Survey (Ex. 2): 7.6-8.1% 2.2-5.9% 8.0% 3.0%
2014 Survey (Ex. 2): 7.4-7.7% 2.7-6.0% 7.8% 3.5%
Morningstar Index Performance:12.65% 1.25% 4.35% 1.8%
Obviously, I used some proxies for the asset classes for the extraction of index return data from Morningstar: VTI, AGG, VEA, IAGG
No doubt that the average predicted 10 year returns back in 2013-14 deviate substantially from the 10-year realized return today.
It will be interesting to see if there are improvements in the predictions over time.
I found some research on financial forecasts (predictions), which are highlighted in a new book to me titled "The Behavioral Investor" by Daniel Crosby 2018 ( https://www.youtube.com/watch?v=ldrTIhQtXyc). Contrarian investor David Dreman found that most (59%) Wall Street "consensus" forecasts miss their targets by so large as to make the results unusable - either under or overshooting the actual number by more than 15%. Further analysis by Dreman found that from 1973 to 1993, the nearly 80,000 estimates he looked at had a mere 1 in 170 chance of being withing 5% of the actual number.
According to James Moniter in his book "Little Book of Behavioral Investing - 2006", In 2000, the average target price of stocks was 37% above market price and they ended up 16%. In 2008 the average forecast was a 28% increase and the market fell 40%. Between 2000 and 2008, analysis failed to even get the direction right in four out of nine years."
And, Michael Sandretto of Harvard and Sudhir Milkrishnamurthi of MIT looked at the one-year forecasts of the 1,000 companies covered most widely by analysts. They found that the analysts were consistently inconsistent, missing the mark by an annual rate of 31.3% on average.
Foot notes listing sources are in Crosby's book.
Quarterly Market Review for Q2 - 2024. (See attached)
Quick overview (ending as of June 2024):
US Stock Market / Bonds Inter. Developed Stocks/Global Bonds
Q2 2024 3.22% 0.07% -0.60% 0.11%
1 year 23.13% 2.63% 11.22% 5.26%
5 year 14.14% -0.23% 6.55% 0.51%
10 year 12.15% 1.35% 4.27% 2.45%
Avg Quarterly
Return Since
Jan. 2001 2.4% 0.9% 1.6% 0.9%
US Stock market continues to kick International developed stock markets. Global bonds continue to do better.
Quarterly Market Review for Q3 - 2024. (See attached)
Quick overview (ending as of September 2024):
US Stock Market / Bond Market Inter. Developed Stocks/Global Bond Market
Q3 2024 6.23% 5.20% 7.76% 3.48%
1 year 35.19% 11.57% 24.98% 9.78%
5 year 15.26% 0.33% 8.36% 0.64%
10 year 12.83% 1.84% 5.68% 2.62%
Avg Quarterly
Return Since
Jan. 2001 2.4% 1.0% 1.7% 1.0%
Well well, International developed stock markets finely did better than US, for one quarter anyway. But, Global bond market did worst than US bond market, very unusual.
Quarterly Market Review for Q4 - 2024. (See attached)
Quick overview (ending as of December 2024):
US Stock Market / Bond Market Inter. Developed Stocks/Global Bond Market
Q4 2024 2.63% -3.06% -7.43% 0.74%
1 year 23.81% 1.25% 4.07% 4.97%
5 year 13.86% -0.33% 5.10% 1.01%
10 year 12.55% 1.35% 5.26% 2.43%
20 Year 10.22% 3.01% 4.95% 3.54%
Avg Quarterly
Return Since
Jan. 2001 2.4% 0.9% 1.6% 1.0%
US Stock market back to kicking International developed stock markets, by 10% this quarter. Global bonds back to doing better than US Bonds.
