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Sometimes it is the long-term expectation is easier than short. During the next decade, there is a possibility that the returns be very weak and prospects bad as they were a century ago.

But in the short term could happen anything. Look at the cases of the coup and upheaval in global markets during the past two weeks, which was largely led by feelings of tension about the U.S. jobs report, which when published yesterday shows that it is fully consistent with the general trend during the past 12 months. Thus some investors warn that we have a contract disappointing, but at the same time confer more money into the stock market.

The picture looks bad in the long term because the bond and stock prices are unusually high. And therefore there is no point of the big shifts between bonds and equities. This makes life difficult for long-term investors, such as pension funds.

Shows a graph of the Cliff, founder er Q R Money Management in New York, that the returns that could have been achieved, after inflation, portfolio comprises of 60 per cent of the shares and 40 per cent of bonds over ten years, at every point since the beginning of the last century. On this basis were not bleak prospects for the past ten to this point.

How could Cliff production forecasts? Intuition is simple. Over periods of a decade unite stock returns significantly increased their prices at the beginning, as measured by the ratio of stock price to cyclically adjusted profit, which compares stock prices relative to average earnings over the previous ten years. And when this ratio in their minimum conditions for U.S. companies included in the S & P 500, ie when they are between 5.2 and 9.6, the average real returns over the next decade 10.3 per cent.

When the ratio is at the top of the scale (46 recorded during the dot-com bubble), the average returns of 0.5 per cent. At present, the ratio of price to earnings of 23.6. This percentage is much higher than the historical average annual return includes a 0.9 per cent over the next ten years.

For Wall Street Exposed Review bonds are long-term relationship with inflation. And the expected real return is the return on Treasury bonds for ten years minus expected inflation over the next ten years. The winning number was close to zero for a period of time.

Consequently, I do not have long-term investors, many places they can hide it. The stock looks expensive relative to its own history, but they seem less expensive than bonds - thus there is no point in switching from stocks to bonds. But I do not have managers little reason to get out of bonds, especially when regulators funds paid on the acquisition. What can we do about it? Osnes indicates that the wish to return by 5 per cent do not need them to overcome their reluctance and resort to financial leverage and derivatives (to enlarge returns from trading safe but boring) and sell short (to make money when stock prices to fall).

The academics discovered enough imbalances in the long term in the stock markets in a manner sufficient because investors have the opportunity to get 5 per cent. For example, tend to cheap stocks that outperform, while stocks with strong momentum tend to continue to move in the same direction. Others who feel similarly pessimistic about the long-term returns are putting the simplest strategies. For example, Jeremy Grantham, founder of wealth management fund "GM or" in Boston, indicates that the assets "of high prices globally," but the price is driven bubbles ecstatic. He expects population shifts to pay dividends to its lowest in the coming decades, but for the time being considered investments "GM or" in stock "overweight modestly" because it is less expensive than bonds. This has led to make a profit.

In the meantime, raises the absence of bubbles possibility that one of them can swell. The events of the past week as to how that can happen to them. Prior to the release of the U.S. jobs report on Friday, the dollar's decline. Japanese stocks suffered affected by the weak dollar and the strong yen "bear market" and actual decline of 20 per cent over a period of almost up to two weeks. This is driven by concerns about the volatility of the date on which it will begin the Fed to withdraw its support for asset prices. And the occurrence of such event would strengthen the dollar. There had been speculation on the report Poor relation to the labor market, which could involve the support of the largest markets for a longer period, and this would weaken the dollar.

But with the Wall Street Exposed publication of the report, which showed that the recovery is still ongoing in the United States, but it is impressive, turned speculation to the early date of the beginning of the process of withdrawal; prevail speculation that September will be the date anticipated, but there is a lot of potential dates other. And lessons learned from last week stating that the market is in a state of panic on the date of the final exit of the Federal Reserve, and that the time element in the near-term market is a nightmare. May result in withdrawal date too far to create a lower risk for dangerous heavy selling of what could happen in the event of premature withdrawal. Thus, the probability occurrence of a surge in the stock accumulates towards forming a bubble fact is a growing possibility. Anyone who can identify the exact timing of it may invest sufficient funds to survive the subsequent developments. But the basic fact remains true: easy to give long-term expectations over the short term. The long-term does not look good.
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