What are realistic expectations for long-term capital market returns, and how are they forecast? Check out this month's Investment Insights for a historical look.
Equity market what to expect in November 2021Vinod Prajapati
In the month of October Large, mid- and small-sized Indian equities performed within a relatively tight range.
So, how will the market perform in November? Here is what experts have to say...
SandPointe
Investment Perspective
-----------------------------------------------------------------
Roger E. Brinner, PhD
Chief Market Strategist and Co-founding Partner
September 2014
When setting expectations,
it’s helpful to see the range of outcomes experienced
by investors historically. For example, how often have
the stock market’s annual returns actually aligned with
its long-term average? Better yet, how often are the markets positive?
Equity market what to expect in November 2021Vinod Prajapati
In the month of October Large, mid- and small-sized Indian equities performed within a relatively tight range.
So, how will the market perform in November? Here is what experts have to say...
SandPointe
Investment Perspective
-----------------------------------------------------------------
Roger E. Brinner, PhD
Chief Market Strategist and Co-founding Partner
September 2014
When setting expectations,
it’s helpful to see the range of outcomes experienced
by investors historically. For example, how often have
the stock market’s annual returns actually aligned with
its long-term average? Better yet, how often are the markets positive?
Summary
Despite pockets of strength, stocks remain in consolidation mode
Elevated volatility of first half unlikely to ebb in second half
Sentiment at mid-year shows optimism and elevated expectations
Second-half pullback could provide strong foundation for continuation of cyclical rally
Interbank call money rates remained below the RBI’s repo rate of 6.50% during most of the month. Sporadic tightness in systemic liquidity prompted the central bank to conduct regular repo auctions and keep call rates in check. The RBI also conducted reverse repo auctions to prevent the rates from dipping too low and to provide banks with opportunities to park idle funds.
Currency in circulation rose 19.1% on-year in the wee
10 Key principals of using evidence investing to improve your odds of success in reaching your goals. This includes embracing the market and using diversification.
The Cogent Advisor, and independent wealth manager in Chicago helping successful professionals simplify their complex financial lives and reach their goals. 312-382-8388. www.thecogentadvisor.com.
Equity Market - What to expect in August 2021?Vinod Prajapati
Although with slower pace, all major indices continued upward journey in the month of July. Mid and Small-caps led the way up this month along with real estate and metal index.
So, where will the market headed in August? Here is what experts have to say...
ICICI Prudential Mutual Funds Fixed income updateiciciprumf
These are interesting times. We have seen the worst growth contraction in decades but interest rates still remains higher than lows seen during other crisis.
ICICI Prudential Mutual Fund- Valuations Perspective November 2020iciciprumf
Our Valuation perspective note indicates that Equity investing can be looked at from a staggered approach with a minimum horizon of ‘3-5 Yrs’ coupled with ‘Dynamic Asset Allocation Schemes’ that aim to manage equity exposure basis market valuations.
Currently, valuations seem reasonable for long term investment, Business Cycle has bottomed out and relatively low FII flows have been recorded. Our framework suggests that it is time to accumulate equities and stay invested for long term.
• Interbank call money rates remained mostly below the RBI’s repo rate of 4% in June as overall systemic liquidity remained surplus.
• Currency in circulation rose 20.6% on-year in the week ended June 19, 2020, compared with 12.7% growth a year ago. The RBI, via its liquidity window, absorbed Rs 3770.33 billion on a net daily average basis in June 2020, compared with net liquidity absorption of Rs 5114.71 billion in May 2020.
• Bank credit growth rose 6.2% on-year in the fortnight ended June 5, 2020, compared with 6.5% on-year growth reported in the fortnight ended May 8, 2020.
We believe that volatility is expected to prevail as the world comes to terms with the evolving COVID-19 situation & its economic fallout. Investors must embrace volatility & be cognizant of their asset allocation while invest.
New highs in the equity markets prompt the questions, "Is it a good time to invest?" and "What is a good strategy?" Read on to see what Cornerstone Wealth Management's Chief Investment Officer Alan Skrainka, CFA, has to say.
Summary
Despite pockets of strength, stocks remain in consolidation mode
Elevated volatility of first half unlikely to ebb in second half
Sentiment at mid-year shows optimism and elevated expectations
Second-half pullback could provide strong foundation for continuation of cyclical rally
Interbank call money rates remained below the RBI’s repo rate of 6.50% during most of the month. Sporadic tightness in systemic liquidity prompted the central bank to conduct regular repo auctions and keep call rates in check. The RBI also conducted reverse repo auctions to prevent the rates from dipping too low and to provide banks with opportunities to park idle funds.
Currency in circulation rose 19.1% on-year in the wee
10 Key principals of using evidence investing to improve your odds of success in reaching your goals. This includes embracing the market and using diversification.
The Cogent Advisor, and independent wealth manager in Chicago helping successful professionals simplify their complex financial lives and reach their goals. 312-382-8388. www.thecogentadvisor.com.
Equity Market - What to expect in August 2021?Vinod Prajapati
Although with slower pace, all major indices continued upward journey in the month of July. Mid and Small-caps led the way up this month along with real estate and metal index.
So, where will the market headed in August? Here is what experts have to say...
ICICI Prudential Mutual Funds Fixed income updateiciciprumf
These are interesting times. We have seen the worst growth contraction in decades but interest rates still remains higher than lows seen during other crisis.
ICICI Prudential Mutual Fund- Valuations Perspective November 2020iciciprumf
Our Valuation perspective note indicates that Equity investing can be looked at from a staggered approach with a minimum horizon of ‘3-5 Yrs’ coupled with ‘Dynamic Asset Allocation Schemes’ that aim to manage equity exposure basis market valuations.
Currently, valuations seem reasonable for long term investment, Business Cycle has bottomed out and relatively low FII flows have been recorded. Our framework suggests that it is time to accumulate equities and stay invested for long term.
• Interbank call money rates remained mostly below the RBI’s repo rate of 4% in June as overall systemic liquidity remained surplus.
• Currency in circulation rose 20.6% on-year in the week ended June 19, 2020, compared with 12.7% growth a year ago. The RBI, via its liquidity window, absorbed Rs 3770.33 billion on a net daily average basis in June 2020, compared with net liquidity absorption of Rs 5114.71 billion in May 2020.
• Bank credit growth rose 6.2% on-year in the fortnight ended June 5, 2020, compared with 6.5% on-year growth reported in the fortnight ended May 8, 2020.
We believe that volatility is expected to prevail as the world comes to terms with the evolving COVID-19 situation & its economic fallout. Investors must embrace volatility & be cognizant of their asset allocation while invest.
New highs in the equity markets prompt the questions, "Is it a good time to invest?" and "What is a good strategy?" Read on to see what Cornerstone Wealth Management's Chief Investment Officer Alan Skrainka, CFA, has to say.
The five steps in financial planning, forecasting internalexternal .pdfamrahlifestyle
The five steps in financial planning, forecasting internal/external finds is critical. With today\'s
economic and interest rate market conditions, along with the volitility of the captial markets,
what factors would you emphasize when you are preparing your forecasts?
Solution
Connect with Vanguard > vanguard.com Executive summary. Some say the long-run outlook for
U.S. stocks is poor (even “dead”) given the backdrop of muted economic growth, already-high
profit margins, elevated government debt levels, and low interest rates. Others take a rosier view,
citing attractive valuations and a wide spread between stock earnings yields and Treasury bond
yields as reason to anticipate U.S. stock returns of 8%–10% annually, close to the historical
average, over the next decade. Given such disparate views, which factors should investors
consider when formulating expectations for stock returns? And today, what do those factors
suggest is a reasonable range to expect for stock returns going forward? We expand on previous
Vanguard research in using U.S. stock returns since 1926 to assess the predictive power of more
than a dozen metrics that investors would know ahead of time. We find that many commonly
cited signals have had very weak and erratic correlations with actual subsequent returns, even at
long investment horizons. These poor Vanguard research October 2012 Forecasting stock
returns: What signals matter, and what do they say now? Authors Joseph Davis, Ph.D. Roger
Aliaga-Díaz, Ph.D. Charles J. Thomas, CFA 2 predictors include trailing values for dividend
yields and economic growth, the difference between the stock market’s earnings yield and
Treasury bond yields (the so-called Fed Model), profit margins, and past stock returns. We
confirm that valuation metrics such as price/earnings ratios, or P/Es, have had an inverse or
mean-reverting relationship with future stock market returns, although it has only been
meaningful at long horizons and, even then, P/E ratios have “explained” only about 40% of the
time variation in net-of-inflation returns. Our results are similar whether or not trailing earnings
are smoothed or cyclically adjusted (as is done in Robert Shiller’s popular P/E10 ratio). The
current level of a blend of valuation metrics contributes to Vanguard’s generally positive outlook
for the stock market over the next ten years (2012–2022). But the fact that even P/Es—the
strongest of the indicators we examined—leave a large portion of returns unexplained
underscores our belief that expected stock returns are best stated in a probabilistic framework,
not as a “point forecast,” and should not be forecast over short horizons. The variation of
expected returns Forming reasonable long-run return expectations for stocks and other asset
classes can be important in devising a strategic asset allocation. But what precisely are
“reasonable” expectations in the current environment, and how should they be formed? For
instance, should investors expect t.
Below please find a link to our monthly market perspective piece for August. Due to the recent rebound in quarterly corporate earnings, this month we explore the importance of this fundamental underpinning to the equity markets.
As we expected, markets in 2014 have been less
influenced by politics and policymakers than in 2013
and more dependent upon growth. Growth is an
essential characteristic of all living things, and in
2014, growth is vital to our outlook for the economy
and markets. Our notes from the field contain
key observations and reaffirm our forecasts. Read the entire report.
What does the new Tax Cuts and Jobs Act mean for you? Our January Investment Insights explores the key points of the most significant overhaul of the tax system since '86, reviewing the new tax brackets, deductions and exemptions, and the effects on the economy.
Compared to equities, bonds at first glance can appear like a throwback to your grandparent's days, but this month we take a look at how bonds may help mitigate risk, and the role they play in a well-diversified portfolio.
While “Keep your eyes on the stars and your feet on the ground” sounds like a social media cliché, it was President Theodore Roosevelt who first uttered the phrase. It was good advice at the turn of the 20th century, and it still holds true today. As with catchphrases, economic cycles ebb and flow with time. Our 3rd Quarter Economic Update takes an interesting look at domestic and global economic health, and world markets.
Cornerstone Wealth Management's July 2017 "Investment Insights" newsletter, focusing on the Dept. of Labor's Fiduciary Rule, which should reduce conflicts of interest and protect the interests of all investors.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
BONKMILLON Unleashes Its Bonkers Potential on Solana.pdfcoingabbar
Introducing BONKMILLON - The Most Bonkers Meme Coin Yet
Let's be real for a second – the world of meme coins can feel like a bit of a circus at times. Every other day, there's a new token promising to take you "to the moon" or offering some groundbreaking utility that'll change the game forever. But how many of them actually deliver on that hype?
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
1. 1 Investment Insights
The Model Wealth Program
Principle-Based Investing
“Principal-based investing means we focus on investment principals
that have stood the test of time rather than basing our decisions
on short-term market predictions. Our goal is to identify a small
number of experienced managers who offer the potential to out-
perform their peers over a long period of time. Our approach is to
combine a well-defined quantitative and qualitative due diligence
process with proprietary construction tools to build, manage and
monitor our client’s portfolios.”
The Model Wealth Program is a managed fee-based investment
program, available through Cornerstone Wealth Management,
LLC. The MWP investment team has developed sophisticated long-
term strategies in an effort to manage and control risk, to help in-
vestors pursue their financial goals. For more information about
the program, contact your Cornerstone Wealth Management rep-
resentative.
Expectations for Capital Market Returns
While forecasts are inherently unreliable, anyone who is serious
about planning for their future must make certain assumptions
about future capital market returns over the long-term.
Our approach to forecasting future capital market returns is to
think about the individual components of total return, estimate
their future value, and sum up the parts to reach an estimated
annual return.
These estimates are a key consideration when determining a
proper asset allocation for the investment portfolios in our
Model Wealth Program.
Setting realistic expectations
In this report, we are providing our updated expectations for long-
term capital market returns. These estimates are a key consideration
when determining a proper asset allocation for our Model Wealth Pro-
gram.
We anticipate that, on average, U.S. stocks will provide an annual total
return of 6.5-8% over the long-term and a well-diversified portfolio of
bonds will return 3-4%. While these figures are well-below the returns
experienced by investors in recent years, we believe they are based on
reasonable assumptions that are appropriate for investors who are
planning for their future.
Investment Insights
December,2017
Alan F. Skrainka, CFA
Chief Investment Officer
Investment Insights
September, 2018
2. 2 Investment Insights
Long-term forecasting
Forecasts are, by their very nature, inherently unreliable.
However, anyone who is serious about planning for their
financial future must make some assumptions about fu-
ture capital market returns over the long-term. In our
view, investors need a guidepost for planning purposes,
and a greater understanding of the factors that determine investment returns. In the ab-
sence of a quality estimate of future returns, investors seem to either rely on wishful think-
ing or a projection of recent results. Either of these approaches is likely to lead to disap-
pointment.
Although the average annual total return on stocks from 1926-2016, as measured by the
S&P 500, was 10.0%, there have been shorter periods of time when the return on stocks
was very disappointing.
Relying on recent experience to set an expectation of future returns can be a big mistake.
The table on the left shows the 10-year rolling periods since 1926 when stocks earned less
than 6%. As you can see, disappointing 10-year periods were often followed by periods of
very robust performance. The rebound was often driven by a better economy. According
to the table, this recovery has proven to be no different.
Forecasting future returns
In our view, a better approach to forecasting future returns is to think about the individual
components of total return, estimate their future value, and sum up the components to
reach an estimated return. Below, we examine the four components of total return for the
S&P 500 since the turn of the century, the beginning of modern data reporting techniques,
and the end of World War II.
10-Year Period Avg Annual Return
S&P 500
Next 10-Year
Average Return*
1926-1935 5.86 8.41
1928-1937 0.02 9.62
1929-1938 -0.89 7.26
1930-1939 -0.05 9.17
1931-1940 1.80 13.38
1937-1946 4.41 18.42
1965-1974 1.24 14.76
1966-1975 3.27 14.33
1968-1977 3.59 15.26
1969-1978 3.16 16.32
1970-1979 5.86 17.55
1998-2007 5.91 8.50
1999-2008 -1.38 15.25
2000-2009 -0.95 13.92
2001-2010 1.41 13.76
2002-2011 2.92 15.82
Average 3.28 13.23
1900-2017 1926-2017 1946-2016 10-Year
Projected*
Inflation 3.1% 2.9% 3.7% 2.0-3.0%
Dividend Income 4.4% 4.1% 3.7% 2.0%
Real Dividend Growth 1.4% 1.8% 2.5% 2.5-3.0%
Valuation Shift 0.6% 0.9% 0.5% 0.0%
Nominal Total Return 9.7% 10.0% 10.8% 6.5-8.0%
Source: Robert Shiller, S&P. Note that individual return factors do not add directly due to the compounding
effects between them.* Cornerstone Wealth Management estimates. Returns shown are annualized.
*The historical data are for illustrative purposes only, do not represent the performance of
any specific investment. Performance data quoted above are historical. Past performance
is no guarantee of future results. Current performance may be higher or lower than the
performance data quoted. Source: Morningstar. Next 10-years, or longest available period
as of August 20, 2018.
3. 3 Investment Insights
Inflation and Dividend Income
We believe the first two pieces are fairly easy
to estimate. Inflation has averaged about 3.1%
over the last 100 years or so, but was signifi-
cantly influenced by very high rates in the
1970s and early-1980s. Excluding the data
from 1970 to 1985 moves the long-term aver-
age down to 2.5%. For this reason, many econ-
omists feel the rate of inflation will be lower in
the future. (Source: Morningstar) A rough esti-
mate of the dividend income can be pulled
from the current dividend yield on stocks,
which according to Bloomberg is 1.90%.
Real (after-inflation) dividend growth and
changes in valuation are the primary drivers to
capital appreciation for stocks, so let’s address
these one at a time.
Dividend Growth
The primary source of dividend growth is
earnings growth. Nominal earnings per share
for the S&P 500 has grown at a rate of 4.7%
since 1900, 5.0% since 1926, and 6.8% since
the end of World War II. Of course, these fig-
ures include inflation. The real (after-inflation)
growth in earnings for each of these time peri-
ods was 1.6%, 1.9% and 3.1% respectively.
Earnings grew faster in the post-war period for
several reasons. The economy has transi-
tioned from agriculture and manufacturing to
services. A service economy is generally less
capital intensive, which has allowed profit
1900-2017 1926-2017 1946-2017 10-Year
Projected*
Nominal Earnings Growth 4.7% 5.0% 6.8% 6.0%
Real Earnings Growth 1.6% 1.9% 3.1% 3.0-4.0%
Nominal Dividend Growth 4.4% 4.8% 6.1% 5.0%
Real Dividend Growth 1.4% 1.8% 2.5% 2.5-3.0%
Beginning Dividend Payout 63% 56% 67% 41%
Source: Robert Shiller, S&P. Note that individual return factors do not add directly due to the compounding effects between them.
* Cornerstone Wealth Management estimates.
Source: Ned Davis Research.
4. 4 Investment Insights
margins to improve. The date after 1946 does not include the Great De-
pression, a period of unusually low earnings growth. It’s also worth noting
that, according to data compiled by S&P Dow Jones Indices, companies in
the S&P 500 generated 71% of their revenue in the U.S. in 2017, with the
remainder generated overseas. As you can see, nominal and real dividend
growth grew in correlation with earnings growth as companies passed
along profits to investors. Given post-war economic trends, we expect fu-
ture real dividend growth to continue to be in the 2.5-3.0% range.
Valuation
The last component of total return is the shift in valuation, as measured by
the price/earnings ratio. The chart on the preceding page shows the price/
earnings ratio for the S&P 500 (price/past 12 months earnings based on
generally accepted accounting principles (GAAP)). When interest rates and
inflation are very low, stocks tend to trade at higher price/earnings ratios.
This has been the case for much of the past 15 years, with the exception of
a brief time during the Financial Crisis in 2008. Today, the price/earnings
ratio of 23 for the S&P 500 is actually below the 25-year average of 25.55,
but slightly higher than the 50-year average of 19.63.
Some market analysts use the price/earnings ratio as a market timing tool.
However, valuation is a very unreliable guide for predicting the stock mar-
ket. Since the stock market trades at a price/earnings ratio of 20 times es-
timated year-end earnings of $143 for the S&P 500 (Source: Ned Davis Re-
search), we assume that valuation will neither add-to nor detract from fu-
ture returns.
Assuming low to moderate inflation, steady dividend income and dividend
growth, and no change in price/earnings ratios, we assume the stock mar-
ket will return 6.5-8% per year over the long run.
Forecast for Bonds
The expected return on bonds should be roughly equal to the coupon pay-
ment, which is approximately 3% for Government bonds, and 4% for invest-
ment grade corporate bonds (Source: Bloomberg, as measured by the Bloom-
berg Investment Grade Corporate Bond Index). Given our current expectations
for inflation, we expect interest rates to rise modestly from current depressed
levels. Since 1900, bond investors have typically demanded a return of about
2% above inflation. For these reasons, bonds purchased in the future should
produce moderately higher returns. We take the conservative stance that re-
turn on bonds will be around 3-4% in the coming 10 years.
While we expect future returns on stocks to be somewhat lower than the past,
we also believe inflation and interest rates will be lower. Therefore, the poten-
tial premium that stocks offer over a 1-Year Treasury Bill may actually be very
similar to the past. This is illustrated in the table below.
Will history repeat?
While history can serve as a guide to future returns, it’s not the only basis for
our estimates. There are several reasons to believe that over long periods of
time, stocks should return more than bills or bonds. First, stock investors often
demand a higher return on stocks and price them accordingly. This is due to
the extra risk inherent in owning stocks. Unlike bonds or bills, there is no
promise to receive a fixed rate of interest or principal back at maturity.
Annual Total
Returns
1900-2017 1926-2017 1946-2017 10-Year
Projected*
Return on Stocks 9.7% 10.1% 10.9% 6.5-8.0%
Return on T-Bills 4.4% 4.2% 4.9% 2.0-3.0%
Equity Risk Premium 5.4% 5.9% 6.0% 4.5-5.0%
Source: Morningstar. *Cornerstone Wealth Management estimates.
5. 5 Investment Insights
The future is bright
The Model Wealth Program uses these conservative estimates to construct
portfolios with the appropriate mix of stocks and bonds. An appropriate asset
allocation should be able to help investors reach their long-term goals of
growth, income, and diversification.
Some investors might believe a total return of 6.5-8% is uninspiring. However,
at a 6% rate of growth, money should double approximately once every 11
years. At 8%, that doubling should occur once every 9 years. (Does not in-
clude taxes or expenses) Of course, in our Model Wealth Program, we attempt
to identify managers that offer the potential to perform better than the market
averages, although this cannot be assured.
We believe this is a great time for investors with long-term goals like saving for
retirement, to put money to work. While the stock market will likely continue
to be volatile, we also believe returns will be higher than most other asset clas-
ses. If that happens, it’s likely that there will be two types of investors in the
years ahead: Those who say, “I’m glad I did” and those who say, “I wish I had.”
We believe the Model Wealth Program is well-positioned to take advantage of
the opportunities in the market. For investors with long-term goals, like saving
for retirement, our suggestion continues to be: stay the course.
Second, stockholders have the potential to profit from growth in the
enterprise they’ve invested in through their claim on earnings and divi-
dends.
Finally, stocks, unlike bonds, have the potential to benefit from infla-
tion. Inflation causes bondholders to receive dollars that are worth less
at maturity, while stockholders benefit from a corporation’s ability to
pass rising costs on to their customers in the form of rising prices.
While future returns on U.S. stocks may be lower than the past, they
should still be significantly higher than the returns on other asset
classes.
Important Disclosures
The information contained in this report is as of August 20, 2018 and was taken from sources believed
to be reliable. It is intended only for personal use. To obtain additional information, contact Corner-
stone Wealth Management. This report was prepared by Cornerstone Wealth Management. The opin-
ions voiced in this material are for general information only and are not intended to provide specific
advice or recommendations for any individual.
To determine which investment(s) may be appropriate for you, consult your financial advisor prior to
investing. Content in this report is for general information only and not intended to provide specific
advice or recommendations for any individual. Economic forecasts set forth may not develop as pre-
dicted and there can be no guarantee that strategies promoted will be successful. Investing involves
risk including the potential loss of principal. No strategy can assure success or protection against loss.
Past performance is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC.
Stock investing involves risk including loss of principal. The payments of dividends is not guaranteed.
Companies may reduce or eliminate the payment of dividends at any given time. The Standard &
Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance
of the broad domestic economy through changes in the aggregate market value of 500 stocks repre-
senting all major industries.
The Bloomberg Global Investment Grade Corporate Bond Index is a rules-based, market-value
weighted index engineered to measure investment grade, fixed-rate securities publicly issued in major
domestic and euro-bond markets. All indices are unmanaged and may not be invested into directly.
Bonds are subject to credit, market, and interest rate risk if sold prior to maturity. Bond values will
decline as interest rates rise and bonds are subject to availability and change in price.
Government bonds and Treasury bills are guaranteed by the US government as to the timely pay-
ment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal
value.