Equities markets are likely to generate more modest returns over the next decade as the successful buy-and-hold strategy that has benefited investors for 40 years is unlikely to produce the same results, Crossmark Global Investments CEO and Chief Investment Officer Bob Doll said Monday.
“Forecasting the day of reckoning for U.S. stocks is challenging, but it stretches credulity to believe it will be beyond our 10-year projection horizon," Doll, known for his annual 10 Predictions list, wrote Monday in his weekly newsletter. "We expect U.S. stocks to deliver mediocre real returns in the next decade.”
Equity markets are “very expensive” by historical standards, undermining their potential future returns, according to Doll, who said Crossmark’s view shouldn’t be interpreted as bearish. The firm expects the global economy to expand at a “decent pace” for the next decade, with potential upside from advances in artificial intelligence.
Bonds should produce positive real returns over the next decade given where yields are now, reversing losses for the past 10 years, he said. Credit will likely continue to outperform government bonds but outperformance will be modest, given tight spreads.
