In this episode of Buckingham Perspectives, Chief Investment Officer Kevin Grogan discusses expectations for stock returns and the implications for your portfolio.
Although stock market returns are difficult to predict in the short term, historically stocks have delivered positive returns approximately three out of every four years*. Current U.S. stock market valuations are relatively high, suggesting lower forward-looking returns. While these valuations cannot be used to time the market in the short run, they do imply varying long-term expectations for different regions. For the broad U.S. stock market, our long-term return expectation (over the next 10 to 20 years) is around 8%. For developed international markets, our long-term return expectation is about 9%, with emerging markets projected to deliver returns of 11%–12%. Over the long term, stocks in any region are still expected to outperform cash and safe bonds, but short-term returns remain highly unpredictable. The market efficiently incorporates information that is currently known, but unexpected developments will likely emerge throughout 2025.
In our view, the best course of action is to stay disciplined to your long-term plan. Reach out to your advisor if you have any questions.
*S&P 500 from 1970-2023.
if you have any questions, please drop us a note.
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