Hello again good sir, its been a long time.
Thank you for your post. It was interesting to hear your thoughts - and you asked about mine.
My view is that GMO's forecast will probably turn out to be right. Or maybe I should say "more right" than any other forecaster who tries to predict returns seven years out.
Like Grantham, I believe in the principle of "reversion to the mean." This as you know is the tendency for things in life to return back to a range we identify as "normal."
Everybody knows trees don't grow to the sky - nor do markets.* Stock and most other asset prices are highly elevated right now, and when market psychology changes from risk taking to risk aversion - and it will - what will follow is not likely to be pretty.
Which of course is why I choose to be a trend follower - as opposed to an investor who buys and holds for the long-pull.
* Except with Central Bank intervention, yes?