US retail sales are expected to rise 0.2% in tomorrow’s May report vs. the previous month, according to The Capital Spectator’s median econometric forecast. The prediction represents a slightly faster rate of growth over the previously reported 0.1% gain for April.
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This is what perfection looks like: high trailing returns and low volatility. US equities (S&P 500) are up more than 18% on an annualized total-return basis over the past five years—roughly double the long-run gain. This happy state of affairs, as usual, is accompanied by a growing number of forecasts that we’ve passed over into a new norm. But we’ve been there and done that, many times, only to find out that visions of grandeur were built on sand. Reality is a series of regime shifts, where risk and return are still stochastic processes. That’s a problem–a big problem, but only if your expectations are set in stone and your portfolio mix is rigid and inflexible.
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