CBS News Moneywatch
's Larry Swedroe examines how closely Bill Gross
' prediction of the "new normal" at the 2009 Morningstar Conference fits actual events. Swedroe's conclusion? Gross got the economic forecast right but not the market forecast.
Gross predicted that risk taking would not be as rewarding as pre-financial meltdown so investors would want to change their allocation mix to include more bonds and stable blue chip stocks. He also suggested investors raise investments outside the U.S. because the dollar would soon lose its status as the world's reserve currency.
While Americans experienced the slowest postwar era recovery and growth slowed internationally, asset classes don't always operate in tandem with the economic reality. Annualized returns from June 2009 to May 2013 for all five major asset classes were well above long term averages, Swedroe writes. U.S. stocks also outperformed international stocks. And the dollar, while it fell, from 104.2 to 102.8 from May 2009 to June 2013, is nowhere near losing its status as the world's currency, Wedroe asserted.
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