The stock market could be in for a decade of next-to-nothing returns, one top fund manager warned. Bill Smead, a top 2% fund manager, predicts that the S&P 500 risks seeing dismal returns for the next 10-15 years due to a speculative bubble in the market. He believes that investors should be prepared for losses on par with the dot-com bust and the 2008 crash.
Smead attributes the potential losses to stubbornly high inflation, which could lead to the Federal Reserve keeping interest rates higher for longer. With inflation on the rise, the economic landscape is starting to resemble the 1970s, a period when stocks struggled due to out-of-control inflation.
Despite the gloomy outlook for the stock market, Smead sees opportunities in “out of favor” investments that typically benefit from inflation, such as oil and gas, real estate, and gold. He remains bullish on these sectors and believes that there will still be opportunities to make money even during a period of stagnant returns for the broader market.
While Smead’s bearish forecast is in contrast to the fairly optimistic consensus view on Wall Street, he warns investors to be cautious and avoid overvalued areas of the market. He believes that the market is in a speculative bubble that could lead to significant losses for investors in the coming years.
Overall, Smead’s warning serves as a reminder to investors to be prepared for potential market downturns and to consider alternative investment strategies in order to navigate a potentially challenging period for stocks.
