Safe bets for pessimists, or this optimist
The stock market has performed magnificently of late. But the gurus at the No-Load Fund Analyst newsletter forecast that returns for U.S. stocks over the coming five years will be in the low to middle single digits -- far below the long-term annualized return of just under 10 percent.</br></br>I don't share the newsletter's depressing outlook. But I take what its editors say seriously. They are smart, careful investors. In recent years, I've found their asset-allocation calls more helpful than their fund picks. What's more, the lousy returns they're predicting are in line with what a lot of other top market strategists are saying.</br></br>To earn healthier returns in the coming years, Jeremy DeGroot, chief investment officer at No-Load Fund Analyst, is most excited about a handful of unconventional bond funds. But don't expect them to return 10 percent a year, either.</br></br>These are long-term investors who don't try to time the markets or make drastic changes to their recommended asset allocations. They tend to adjust those allocations on the margin based on their assessment of economic conditions and valuations of different asset classes.</br></br>DeGroot and his colleagues forecast grim returns for nearly every part of the stock market. "We don't think this is a typical recession cycle," he says. "Recoveries from financial crises, such as this one, tend to be worse than average recoveries."