From Investment Ideas:
...It gives us something to get our teeth into. What could be more boring than global equity markets at fair value?LARGE CAPS.
About a quarter of the U.S. equity market—the high-quality, boring, great companies—is about fair price, too. The other three quarters are overpriced, and based on our numbers have a slight negative imputed return.
Come back in seven years, and you will not have made a penny, adjusted for inflation, outside the giant brand names, the Microsoft s [ticker: MSFT], Apple s [AAPL], and so on. So if you add the high-quality brand names to global equities, you have a pretty nice diversified portfolio with a slight high-quality tilt. So you are looking at an almost normal return of 5½% real.
The bond market is a different story. It is manipulated mainly by the Fed to be artificially low, to move the stock market and have a benevolent effect on consumption. Operation Twist [involving the Fed's efforts to lower longer-term interest rates by shifting its portfolio toward lengthier maturities] is a dangerous long-term mistake....
[good one, all caps, large -ed]