What do members here think T-Bills, the broad stock market index and Berkshire's equity portfolio will return over the next 5-10 years?

In nominal terms I would guess something like 4.5% for T-Bills (the current yield), 3.5% for the S&P 500 (the trailing twelve months earnings yield) and 5.5% for Berkshire Hathaway's equity portfolio (S&P 500 plus 2 percentage points). If this is more or less correct, then a very high allocation to T-Bills makes sense.

If I'm allocating based on my estimated returns for the next 30 years instead of 5-10 years, then I would up the estimated S&P 500 return to maybe 8% (historical return of 10%, minus 2 percentage points for reversion to the mean, trailing P/E of 17). In that case my allocation to T-Bills would be quite low.

What is your thinking? Even if we don't want to give numbers out loud, we are still making bets in our portfolio allocations. I hope we all guess right, or what's right for us.

Berkshire Hathaway FAQ

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