FOREWARNED IS FOREARMED

From an interview at the end of 2018 with Greg Davis, Vanguard’s Chief Investment Officer:

“The bull market in stocks that began in many parts of the world in early 2009 is nearly a decade old. Should investors adjust their expectations?

“Based on our fair-valuation metrics, we expect globally diversified stock portfolios to deliver annualized returns in the 4.5%–6.5% range over the next ten years. That’s roughly half of their long-term historical average return. And it’s roughly a third of their annualized gains since the depths of the financial crisis a decade ago. So, yes, some investors probably are expecting too much from stocks.

“Below our headline expectations for global stock portfolios, which assume dollar-denominated investments, are somewhat higher forecasts for non-U.S. markets and somewhat lower forecasts for the U.S. market. We’re a little more optimistic about stocks outside the U.S. because their valuations are lower.”

And one more observation from an interview with WealthManagement.com:

WM: Do active managers have an edge in volatile markets?

GD: That’s always been the claim, but we haven’t seen the data really bear that out.

His observations are consistent with our expectations.

Vanguard: Our CIO talks expectations, interest rates, and blockchain

WealthManagement.com: Inside ETFs Q&A: Vanguard’s Gregory Davis

A HEAD-SCRATCHER

SEC’s latest on fiduciary: Advisers can customize individual client agreements

Disclosure and informed consent can limit services, allow third party pay

“When Securities and Exchange Commission chairman Jay Clayton asserted at a congressional hearing last week that investment advisers can ‘contract around’ their obligation to act in a client’s best interests, it caused some head scratching in the adviser community.

In response to being pressed by Sen. Elizabeth Warren, D-Mass., about the SEC’s investment advice reform proposal, Mr. Clayton said: ‘Advisers are allowed to contract around this standard; it’s not well known. This is something we want people to understand.’”

InvestmentNews: SEC’s latest on fiduciary: Advisers can customize individual client agreements

A head-scratcher indeed. All the more reason to be sure your financial advisor signs the OATH. See below in the “FOR SHAME” note for a copy.