In an interview with Bloomberg, Vanguard’s former CEO and current chairman F. William McNabb cautioned that investors should expect very modest returns from stocks over the next decade. Vanguard doesn’t have an axe to grind here so it wouldn’t hurt to listen what Mr. McNabb has to say.
The meat of his comments are below. You can read the full story here.
F. William McNabb, Vanguard Group’s chairman, cautioned investors to consider reducing their stock exposure before the nearly 9-year-old rally ends.
“We would expect the next decade to actually be very modest on the equities side in the U.S., a little less so in Europe and a little less so in Asia,” McNabb said in a Bloomberg Television interview that aired Thursday. “But it’s still overall lower than long-term historical averages.”
Stock markets reached a fever pitch in 2017 as the S&P 500 Index hit record highs and the rally has continued this year. The advance, buoyed by low interest rates around the world, economic growth and the U.S. tax overhaul, has sparked concerns that valuations have gotten stretched, spurring some investors to brace for a decline.
McNabb, whose firm oversees about $5 trillion, said long- term investors may benefit by holding balanced portfolios with bonds as well as stocks.
“No one can predict what’s going to happen in the next 12 months,” he said. “Having just said that, I’m sure the equity market will continue to skyrocket for the next few months.”
Jeremy Jones, CFA
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