West Loop Financial LLCAssessing Expected Returns – West Loop Financial LLC https://www.westloopfinancial.com Evolutionize Site Wed, 19 Aug 2020 20:50:49 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Assessing Expected Returns https://www.westloopfinancial.com/2014/10/27/assessing-expected-returns/ https://www.westloopfinancial.com/2014/10/27/assessing-expected-returns/#respond Mon, 27 Oct 2014 09:00:03 +0000 http://evolvemypractice.com/?p=1418 At a recent meeting with a nonprofit organization, my firm was asked to explain why we don’t consider historical stock returns the best estimator of future returns. They wanted to understand why we instead rely on our own forecasts. Their request came in part because another firm had suggested in a previous pitch that forecasts...

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]]> At a recent meeting with a nonprofit organization, my firm was asked to explain why we don’t consider historical stock returns the best estimator of future returns. They wanted to understand why we instead rely on our own forecasts.

Their request came in part because another firm had suggested in a previous pitch that forecasts using anything other than historical returns were nothing more than opinion.

I thought sharing our response to the question posed by the nonprofit would be helpful for investors in general. First, we completely agree that investors shouldn’t make decisions based on personal opinion. Rather, investment decisions should be grounded in applicable academic research.

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