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Old 01-18-2018, 08:42 AM
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whell whell is offline
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Join Date: Aug 2010
Location: Metro Detroit
Posts: 11,310
Originally Posted by Chicks View Post
Muted returns for stocks expected over next decade. In line with Krugman’s predictions, from someone who can hardly be called a “lefty”, lol. The party’s ending, time to switch to a boring 60/40 portfolio.
You do what you think is best for you. If you're closer to retirement than other folks, or a lower personal risk tolerance, then yeah, a 60/40 or even a 50/50 portfolio might make more sense. If you've got a longer time horizon to retirement, or a higher risk tolerance, a 60/40 portfolio makes no sense.

As to the long term outlook for stocks, yeah, the predictions for less stratospheric returns than what happened in 2017 and early 2018 makes sense. Last year and this year, if plotted on a growth chart that starts in 2000 and rolls out to 2050, will probably look like bumps on an upward bending curve. There may also be some dips, and I wouldn't be surprised if there was a pull back later this year or next. According to this article in Morningstar:

With stocks posting another stellar year last year--and with valuations that could hardly be described as cheap--most serious experts are even more circumspect in their long-range return expectations today.

True, economic fundamentals are fine: The economy is solid, unemployment remains low, and corporate earnings growth has been robust. But much of that good news is arguably already priced into stocks' valuations today.

So, no, "the party" isn't over, but it might be winding down to something that looks more like a the usual backyard barbecue and less like a New Year's Eve bash in Times Square. Therefore, there's no need to abandon a long term strategy or over-react to what some think might/might not be happening over the next several years.
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