GMO argues traditional portfolios are unlikely to meet investor return expectations, pushing the case for contrarian investing and global diversification. The paper challenges the viability of the 60/40 model, suggesting real returns could hover near 0% annually. It also highlights emerging markets trading at materially lower valuations, positioning them as a more compelling long-term opportunity.
Dare To Be Different
GMO
James Montier
Research
7 Pages
Key Takeaways
60/40 Return Outlook: A standard 60/40 portfolio may deliver around 0% real returns over the next decade, with optimistic assumptions only reaching roughly 3%.
Emerging Market Valuations: Emerging equities trade near a 13x Shiller P/E, with some value segments in single digits, signaling historically attractive entry points.
Contrarian Career Risk: Deviating from consensus increases professional risk, yet following the crowd may lock in low long-term returns despite recent 10-year outperformance.
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