The EU’s leaders “cling to the decaying corpse of a European super nation-state with no clue as to what alternative other than breakup and secession there might be.” read more »

We are speculating about possible strategies investors might use if, as seems likely, we find ourselves mired in a long period of unacceptably low investment returns. Last week we looked at the possibility of adopting much more aggressive equity allocations than most of us would normally be comfortable with. We found that a portfolio allocation of 90% to equities looked more interesting than we might have expected, but that it presented some serious behavioral issues. This week we’ll look at the role illiquid investments might play in our future portfolios. read more »

If we are in fact facing a prolonged period of subpar returns in both stocks and bonds, as seems likely, there are almost limitless ways this future could play out. We might, for example, simply experience long years of generally positive – but  low – returns, interspersed with down years. At the end of the decade a growth-oriented portfolio might have compounded at 3% per annum. read more »

Virtually every thoughtful observer of the stock and bond markets has concluded that investment returns in the future are likely to be well below recent returns and even well below long-term norms. This situation is reminiscent of the late 1990s. In 1999, following an almost uninterrupted 17-year bull market, investors on average expected future stock returns to be about 12% per annum. More thoughtful observers were estimating roughly 0%. As it turned out, the answer was 1.95%. read more »

During the 1992 Presidential contest between George H. W. Bush and Bill Clinton, Clinton’s campaign manager, James Carville, wanted to keep his campaign staff focused on Bush’s biggest weakness: the US economy had fallen into recession. Carville therefore posted a sign at campaign headquarters reading, “It’s the economy, stupid.”(1) read more »