A 30-year investment banking veteran showed her some pity , saying , “ Liz Ann , I don ’ t envy your position . I don ’ t think the market will ever come back to prior highs .” He expressed doubt that the retail investor would “ ever come back ,” adding that he didn ’ t know “ how a firm like Schwab could possibly survive .”

As she and her husband got in their car , he looked at her and said , “ Did you hear it ?” They realized that the proverbial bell , the one that rarely rings at the bottom of bear markets , had just clanged .

The market dislocations experienced today bear little resemblance to that era , when stocks had fallen more than 50 %, unemployment was 10 %, and many home mortgage loans exceeded the value of the underlying properties . But Sonders believes there will be opportunities for investors .

The sprawling complex of index and factor funds inevitably creates imbalances and dislocations . “ Utilities live in the value indexes , but they are more expensive than the S & P 500 ,” she said .

Even within technology , investors who looked for high-quality companies within the value sector last year have found some of this year ’ s leaders . “ You can find opportunity within all 11 [ S & P ] sectors ,” she said .

At the same time , she warned that advisors and investors can “ fall into traps ” by simply dividing the market into growth and value and “ investing passively .” Changes in market leadership trigger a reclassification of companies in and out of different indexes , asset classes and style factors . Netflix and Meta Platforms , for example , are winding up in some value indexes .

The next cycle is unlikely to enjoy the same powerful tailwinds the last one did . From 2014 on , asset management complexes like JP Morgan , AQR and GMO steadily predicted U . S . equities would generate low single-digit real returns or worse for the next five or 10 years . Sonders wasn ’ t among them back then .

Most of those estimates were based on current valuations and past performance , which conventional wisdom maintained borrowed current returns from the future . Sonders told advisors the best indicator of future returns is actually the level of U . S . household equity ownership , data that the Fed tracks .

Now models using this data set predicts low single-digit returns , Sonders said , or about 3 %. That ’ s something , but not much , to get bullish about .

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