Cliff Asness, AQR Capital on the Masters in Business Podcast:
The market's expected return is lower than historical, but investors get to keep more of that return, so it makes sense. Investing is much more efficient with indexing.
That's very interesting to me. We pull up data of historical returns and see how well our parents/grandparents could have done, but usually they didn't. Why? They didn't invest, or if they did the costs were high (no indexing, high broker fees, high fund fees, etc).
So our parents/grandparents could have gotten the market's 7% return over 50 years, less 2 or 3% in fees...
Asness predicts future real returns of 4% from stocks and 0.5% from bonds, 60/40 portfolio 2.6%, with inflation 1-2%.
Maybe 4% real ain't so bad after all.