Goldman Sachs: American Investors ‘Open’ but Skeptical about Buying European Stocks

The London-based team at Goldman Sachs has been approaching U.S. investors about buying European stocks, according to a recent article in Barron’s. “The good news is, they’re not hanging up the phone,” the article states. “On the other hand, they’re still not buying either.” Goldman strategist Sharon Bell notes that the yield gap between equities and bonds “remains substantial and in our view should continue to encourage asset allocators to search for growth and value… Read More

Goldman Gives this a 90% Chance of Happening Over Next Decade

Strategists at Goldman Sachs, led by David Kostin, estimate that the S&P 500 will generate average annual returns of 6% over the next decade. This according to an article in MarketWatch. The Goldman team arrived at their estimate using five factors: Absolute valuations Relative valuations Equity allocations Dividend yield estimates Economic modeling “To make a long story very short,” the article says, “the cyclically adjusted price-to-earnings ratio is a high 26.5, but interest rates are… Read More

Berkshire Hathaway Dumps Holdings in Goldman

A recent Wall Street Journal article reports that Warren Buffett’s Berkshire Hathaway, which funneled $5 billion into Goldman Sachs Holdings in 2008, “slashed the bulk of its holdings” during the first quarter of this year. “The sale reflects a coda of sorts to an investment born of the financial crisis,” the article notes, adding that Berkshire’s 2008 investment represented a vote of confidence “during a period of existential uncertainty on Wall Street.” One of Goldman’s… Read More

Goldman: Value Investing Still Alive, with This Twist

A recent CNBC article reports that, according to Goldman Sachs, there’s still life left in a value investing strategy, especially with the Fed set to cut rates again.  Goldman says that value stocks are poised for a comeback, adding that the valuation gap between expensive and cheap stocks is the widest it’s been in nine years. The article offers insights from the firm’s chief U.S. equity strategist David Kostin, who said in a recent note,… Read More

Goldman Sachs Says Economy May Have Hit Bottom

The chief economist for Goldman Sachs Group Inc., Jan Hatzius, believes that the global economy may have already bottomed out, according to recent article in Bloomberg. In a recent note, Hatzius and colleague Sven Jari Stehn wrote, “some green shoots are emerging that suggest that sequential growth will pick up from here,” adding that Goldman expects: upside on risk assets, albeit probably at lower levels as “markets have become ‘more sanguine on recession;’ “ bond… Read More

Goldman’s Bear Market Indicator Signaling Zero Returns Over Coming 12 Months

Goldman Sachs’ bear market prediction metric is at 73 percent, the highest level since the late 1960s and early 1970s, according to a CNBC.com article. The elevated level has historically signaled a zero-average return over the ensuing 12 months and a “substantial” risk of drawdown, the article reports. The indicator considers the unemployment rate, manufacturing data, core inflation, the yield curve and share valuations. According to Goldman chief global equity strategist Peter Oppenheimer, “Historically, when… Read More

Goldman Buying Turkey and Argentina Debt

Goldman Sachs Asset Management is betting on the worst-performing emerging markets by buying up Turkish and Argentinian government debt, according to an article in Bloomberg. The article reports that the firm “has taken an overweight position in the nation’s dollar bonds” based on the rationale that the notes have been “decimated” by investors “fleeing a rout in emerging markets.” Goldman’s head of fixed income (Asia-Pacific) Philip Moffitt, said that in places like Turkey, “where the… Read More

Goldman: Stocks May Be Hearing Credit Warning Bell

Strategists at Goldman Sachs say that U.S. investment-grade debt has trailed equities for a month and has been “behaving in a way that portended the last big equity shakeup,” according to a recent article in Bloomberg. Similar to earlier in the year, credit has trailed equity (when measured relative to volatility) while tech stocks have set records. In a recent note, the strategists wrote, “In early January, modest widening in credit contrasted sharply with a rapid… Read More

Goldman Sachs: High Valuations Mean Pain is Coming

The current environment in which stocks, bonds and credit have been expensive at the same time—a situation last seen in the 1920’s and 1950’s–will eventually bring “pain for investors,” according to Goldman Sachs Group Inc. This according to a recent Bloomberg article. In a recent note, Goldman argues that the slowdown in quantitative easing is “pushing up the premiums investors demand to hold longer-dated bonds” which will suppress returns over the medium term. Another possibility,… Read More

Goldman’s Rebuilt Quant Approach

When quantitative equity funds experienced a meltdown ten years ago, Goldman Sachs (among the hardest hit) “began to rebuild the strategies with less leverage and more diversity,” according to a recent Bloomberg article. “A decade later,” the article says, “the quant unit has clawed itself back to respectability,” and now manages about $110 billion. But the team faces stiff competition, “with almost every asset manager chasing quant money, betting on similar factors and shaving fees… Read More