What The Markets Tell Us About Future Economic Growth?
Examining the historical record to see, if any of bond, stock, and real estate markets have provided a reliable signal for future economic activity.
Despite considerable research on the topic, there remains a wide range of views on how best to generate the long-term equity return forecasts that CIOs use for their asset allocation decisions. To analyze this issue, our IAS team evaluates the out-of-sample historical performance of two common approaches, or methodologies, for estimating 10-year equity market returns:
Which approach has had a better track record? Has either approach produced better forecasts than simply using a long historical average return as a predictor of future returns?