By Scott Ronalds
It’s been a great four years, but let’s not get carried away with this market. It’s time to be patient. This was one of the messages Tom emphasized on BNN this morning.
With the strong run in the markets, stock valuations are now at the upper end of a normal range. As such, our guidance on returns over the next five years has come down. We think 5-7% (per year) is a reasonable expectation for stocks, whereas 1-3% is more realistic for bonds.
If you haven’t touched your portfolio over the last few years, now may be a good time to rebalance back to your strategic asset mix (SAM), as your stock weighting has likely drifted higher and your bond weighting lower. In the Founders Fund, we’ve trimmed the weighting in stocks and added slightly to bonds (more on these adjustments here).
Tom also addressed investor sentiment and the danger of chasing returns. You can watch the clip here (6:15 mins).