“New Normal” May Be Even Newer Than We Thought

November 11th, 2010
by Portico Wealth Advisors

Insider Monkey posted an article this morning on TheStreet.com containing a few shots at Bill Gross and Mohamed El-Erian’s widely-publicized theory of “New Normal.”  In short, the theory suggests that, given the above-mean returns of the 80’s and 90’s as well as the current fiscal state of the country, returns (particularly, in the US) are going to be lower than historical averages, e.g. 4-5%/yr going forward.

We mention this article, not because we disagree with the luminaries at PIMCO.  Actually, we continue to tilt client portfolios to emerging markets and alternatives based on a similar line of longer-term thinking.  We simply mention it, because it is an interesting example of how theories take on a life, and sometimes a history, of their own.