I've been spending a lot of time reviewing Wall Street's forecasts for long-term asset returns. It's pretty shocking tbh.

2/ People talk about the 60-40 portfolio being "dead." I think the common assumption is it's "dead" because returns from bonds are unlikely to match the returns we enjoyed from 1980-2020, when interest rates fell from 20% to 0%, boosting bond prices.

3/ I looked at the long-term capital market assumptions of JPMorgan, PIMCO, BlackRock, and Vanguard. They are indeed relatively bearish on bonds, forecasting long-term returns of 4.80% on average.

4/ But on a risk-adjusted basis, they're actually more bearish on stocks. Here are the average forecasts: * US Stocks: 6.25% annual returns, 16.32% volatility * US Bonds: 4.80% annual returns, 5.21% volatility That's a lot more risk for very little extra return on stocks!

5/ If you wonder why Wall Street is pushing private equity, private credit, crypto, and other exposures, it's in large part because they're just not very optimistic about stocks. Using the forecasts above, a blended 60/40 portfolio would 5.67% per year. Gotta do something.

JPMorgan: PIMCO: BlackRock: Vanguard: