Guggenheim investment chief Scott Minerd just made a bold forecast for a sluggish decade of US stock returns
- Scott Minerd, the global chief investment officer of Guggenheim Investments, said US stock valuations are so high that he expects minimal returns over the next decade.
- He added that both stock and bond prices are "inflated" and isn't expecting very strong returns from either asset class.
- Speaking at the annual Milken Institute Global Conference, Minerd wasn't alone in saying the 10-year bull market in stocks will eventually give way to weaker returns.
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Scott Minerd, the global chief investment officer for Guggenheim Investments, left a Milken Institute audience gasping with a prediction of 10 years of shaky returns.
"For US equities over the next decade we should be expecting maybe a 1% to 2% return" based on current stock market valuations, Minerd said. "This long period of outperformance is eventually going to run into a period of underperformance."
Minerd was speaking along with a group of other respected investment pros Monday at the annual Milken Institute Global Conference in Beverly Hills, California. Since the end of 2008, the S&P 500 has delivered an annual return of about 18%, roughly double its historic average.
US stocks are at record highs with the bull market in its tenth year, and Minerd wasn't alone in predicting weaker returns in the years ahead. The participants pointed out obstacles including sluggish economic growth and political turmoil in Europe and rising political divisions.
That would be troubling enough, but he said other assets are also overly expensive.
"Not only are equities inflated in value, but bonds are inflated in value," Minerd said. "We're continuing to inflate assets … and not really being compensated to take on a lot of risk."
He added that inflation is likely to stay low for a long time, and bonds won't provide much of a return either.
Guggenheim managed $209 billion in assets at the end of the first quarter 2019.
It's not the first time Minerd has voiced expressed concern about future stock performance. But the extent of his pessimism caught at least one of his fellow panelists by surprise.
"Worse than us!" exclaimed David Hunt, president and CEO, PGIM, Prudential's investment management business. Minutes earlier, Hunt had said he expected annual returns of about 4% over the next decade.