A survey of professional investors by Sponsor-Software Systems found the average money manager foresees a 63% chance of economic growth in the United States this year, an 18.8% chance of economic stagnation, a 10.2% chance of inflation and an 8% chance of a recession.
Growth was defined as the Federal Reserve Board's index of industrial production rising faster than inflation. Projecting out five years, respondents say there's a 57.2% chance of economic growth.
Using those economic forecasts - combined with data on market performance over 30 years - SSSI forecasts large stocks would return 8.4% this year; small stocks, 20.3%; foreign stocks, 11.9%; and domestic bonds, 18.7%. To achieve at least a 10% return, the optimal portfolio mix would be 43% in small-cap stocks, 6% in foreign stocks and 51% in domestic bonds, according to SSSI.
