No. of Recommendations: 6
That's a reasonably onerous projection.
If the Fed's expected ~2.5% inflation holds for the next 7 years, and large caps return -7.3%, net of inflation that is about a 51.5% total loss.
Even from 1929-1936 stock losses on an annualized basis were about -3.5% to -5%. And given that was a deflationary environment, it wasn't quite as "bad" as GMO's prediction.
I'm reasonably hedged in fixed instruments, but don't see going 100% fixed instruments as this would seem to call for. If this plays out, it would indeed be a record breaker. In a bad way.
It also seems that about 95% of rolling 7 year periods show a positive return in stocks, so you have to have big brass spheres to bet against that with authority.
