Since the 1990s, Bob Doll, BlackRock Vice Chairman and Chief Equity Strategist for Fundamental Equities, has published a series of economic and market predictions at the beginning of each year. Typically, these predictions address the state of the US and global economies, potential returns for equities and other asset classes, significant geopolitical developments and other topics that can have a significant impact on investors.
As the global economy and world financial markets are currently in the midst of an important recovery from near-depression conditions, and with the dawning of a new decade, Doll decided to also offer a series of 10 predictions for what might unfold during the next 10 years, as reported below.
1. US equities experience high single-digit percentage total returns after the worst decade since the 1930s.
2. Recessions occur more frequently during this decade than only once a decade as occurred in the last 20 years.
3. Healthcare, information technology and energy alternatives are leading growth areas for the United States.
4. The US dollar continues to become less dominant as the decade progresses.
5. Interest rates move irregularly higher in the developed world.
6. Country self-interest leads to more trade and political conflicts.
7. An aging and declining population gives Europe some of Japan’s problems.
8. World growth is led by emerging market consumers.
9. Emerging markets weighting in global indices rises significantly.
10. China’s economic and political ascent continues.
Given this backdrop, what should investors expect during the next decade? “Overall, we think investors should prepare themselves for a general ‘reversion to the mean’ in terms of economic growth and market performance. We expect to see relatively slow (but positive) levels of economic growth in the coming years, marked by occasional and more frequent recessions. From an equity markets perspective, we are forecasting decent, but not stellar, returns in the coming decade,” concluded Doll.
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Source: Bob Doll, BlackRock, August 2010.
