Welcome to thoughts in the market. I'm Andrew Sheets, Chief Cross Asset

Strategist from Morgan Stanley. Along with my colleagues bring you a variety of

perspectives, I'll be talking about trends across the global investment landscape and how we put those different ideas together.

It's Friday, November 1st, at 2 PM in London.

Morgan Stanley's research department is currently working on and debating what we think the market will

look like in 2020. But before thinking about the year ahead, it can be useful to

take an even longer perspective. If we put aside the noise around politics and

trade, ignore the market's obsessions about every word

that Central Banks utter or every data release, and step back from it all, what sort of returns

can a long-run investor expect from this market?

This is not a purely academic exercise.

Assumptions about the long-term return outlook have real implications for how

investors think about retirement security, how institutions think about

solvency, and how asset allocators think about strategic

tilts. Long-run views of the market have limits. By being rooted in valuation, they are often driven

by a factor that has little bearing on performance over the next six to 12 months.

Evaluation also has advantages, proving far more accurate than any other variable in determining

what the five-year or ten-year experience of an investor will be.

And at the moment, that experience looks challenging.

On our estimates, the expected return of a US 60-40 portfolio of stocks

and investment grade bonds will return just 3.9% per year over the next decade,

close to the lowest expected return of the last 20 years and one that's only been worse

...