GMO has released its latest 7-year asset class forecasts (based on prices on January 31).

The forecasts are average annual returns over 7 years
based on current prices relative to cyclically adjusted earnings,
 return on equity, and other measures.

 The expected returns are "real" (adjusted for inflation, which is presumed to be 2.5%).

In the past, GMO's forecasts have often been very accurate.
The bottom line:
  • US stocks will have crappy returns, especially small stocks, with one exception...
  • US "high-quality" stocks (high cash flow, low debt) will do fine (just below average)
  • International stocks will have fine returns (just below average)
  • Bonds and cash will have horrible returns across the board
  • Trees (timber) will have their usual impressive returns