Sera Capital Q4 2020 US LARGE CAP 10-Year Forecast: 0.74%
For those that are reading our forecast for the first time, our philosophy is simple. The best interest rate forecast for the next 10 years is always the current rate on the US 10-Year Bond. It’s silly to think otherwise. The rate today reflects the global viewpoints and wisdom of all participants.
10 Year Bond: .74% (10/16/2020)
Our equity forecast is slightly different. Research indicates that a 1-year forecast of the S&P 500 is worthless based on statistical analysis. The same holds true for forecasts up to 5 years. However, as you start approaching the 10-year mark, forecasting gets more and more accurate. What we do is aggregate the longer-term forecasts of the most reputable long-term forecasters and techniques to come up with our own.
To calculate our equity forecast, we take an average of GMO’s 7-Year Forecast, Research Affiliates’ 10-Year Forecast, Vanguard’s 10-Year Forecast, BlackRock’s 10-Year Forecast, Hussman’s 12-Year Forecast. (Please note we’ve added Vanguard and BlackRock’s Forecasts as of Q4 2020).
The following is a link to the forecasters we aggregate in order to come up with our forecast.
7 – Year Forecast – GMO: (As of 9/30/2020)
US Large Cap: -5.8%
10 – Year Forecast – Research Affiliates: (10/16/2020)
US Large Cap: 0.2%
10-Year Forecast – Vanguard (09/24/2020)
US Large Cap: 4.7%
10-Year Forecast – Blackrock (10/16/2020)
US Large Cap: 5.8%
12 – Year Forecast – Hussman: (09/30/2020)
US Large Cap: -1.2%
This is the first and probably the only time where the 10-year forecast for stocks is the same as the 10-year forecast for bonds.