Not a subscriber? Click here to learn
more.
|
| Home | About Us | Resources | Archive | Free Reports | Market Window |
The Best Seven-Year Investment ForecastBy
Monday, August 12, 2013
By luck or by skill, Jeremy Grantham delivered the best stock-market forecast in our entire generation...
In 2001, Grantham correctly predicted that U.S. stocks would be the worst-performing asset class for 10 years. They were.
But this was more astounding: He looked at 11 major asset classes and put them in order by how well he thought they'd do over the next decade. He got the order almost exactly right. (None were more than two spaces from their actual rank.)
It was the most accurate prediction of asset returns I have seen in my career. And he just came out with his latest prediction...
There's only one paper asset he believes will outperform over the next seven years... stocks in emerging markets.
Grantham expects emerging-market stocks to return 7% a year AFTER inflation. Grantham assumes inflation will be about 2%, so that's a 9% return per year on emerging markets.
According to Grantham, no other financial assets will come close to the return of emerging-market stocks.
What's so great about emerging-market stocks right now?
In my mind, EVERYTHING. I look for three things in an investment... I want it to be cheap, hated, and in an uptrend. We have all three today in emerging markets.
I wrote about this a few weeks ago to paid subscribers of my True Wealth newsletter. Specifically, I said:
Emerging-market stocks bottomed in late June... Smart traders should buy now and set a stop loss at the late-June lows. Your downside risk is limited... and your upside is triple-digit profits.
The most popular way to trade emerging markets is through shares of the iShares MSCI Emerging Markets Fund (EEM).
Grantham correctly called the top in stocks in 1999, and he called the bottom in stocks at the end of 2008. Now, he says emerging-market stocks will be the only place to make "real" money over the next seven years.
If you don't have much exposure to emerging markets yet, now is a great time to open a new position or add to your holdings... Shares of EEM are a simple way to do it.
Good investing,
Steve
Further Reading:
Steve believes there's a simple way to look at all investments through the same lens – whether it's stocks, bonds, real estate, or something more exotic. And right now, he says, "it shows a clear winner in the global investing landscape." Click here to learn the measure Steve uses to gauge any investment... and what it says about emerging markets today.
If you're not ready to take the plunge into emerging-market stocks, Dan Ferris says there's another way to invest in these high-growth markets, with "the peace of mind of buying safe, blue-chip stocks." Find out how in this classic essay.
Market NotesNEW HIGHS OF NOTE LAST WEEK
Humana (HUM)… insurance
UnitedHealth Group (UNH)… health care Mylan (MYL)... generic drugs BB&T (BBT)... bank Hershey (HSY)... chocolate Wendy's (WEN)… fast food Papa John's (PZZA)… pizza Best Buy (BBY)... electronics Tesla Motors (TSLA)... electric cars Under Armour (UA)… "sporting" products Bed Bath & Beyond (BBBY)... home furnishings Lowe's (LOW)... home improvement MGM Resorts (MGM)... casinos Smith & Wesson (SWHC)... guns Staples (SPLS)... office supplies Xerox (XRX)... printers and tech services Cisco (CSCO)... networking giant Facebook (FB)... social networking Herbalife (HLF)... multilevel marketing
ConocoPhillips (COP)... Big Oil
Chesapeake Energy (CHK)... natural gas producer
Lockheed Martin (LMT)... "offense" contractor
Raytheon (RTN)... "offense" contractor
3M (MMM)… manufacturing
NEW LOWS OF NOTE LAST WEEK
J.C. Penney (JCP)... struggling retailer McDermott (MDR)... infrastructure builder Hatteras Financial (HTS)... virtual bank Alpha Natural Resources (ANR)... coal Southern Copper (SCCO)... copper Mosaic (MOS)... fertilizer |
In The Daily Crux
Recent Articles
|
