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

Gundlach Says Stocks Could Be “Burnt Out”

In a webcast last month, DoubleLine Capital co-founder Jeffrey Gundlach warned investors that too much stimulus could backfire, citing how the U.S. deficit has grown along with S&P returns. This according to an article in Advisor Perspectives. While tax cuts, deficits and debt have been responsible for the growth in the U.S. economy and stock market, says Gundlach, it remains to be seen what will happen now that the Fed is in tightening mode. “We’ll… Read More

Vanguard Expects Low Market Returns

Economists at the Vanguard Group think stocks will continue to grow, but at a lower rate of return in the medium term (of between 4% and 6%), with U.S. stocks trailing international equities. This according to a recent CNBC article. In a recent report to investors, Vanguard chief economist Joe Davis wrote, “Overall, the risk of correction for equities and other high-beta assets is projected to be considerably higher than for high-quality fixed-income portfolios.” While… Read More

Hulbert Says War Doesn’t Scare the Stock Market

While the stock market doesn’t like war, the uncertainty that precedes a foreign military operation is typically resolved soon after any U.S.-led hostilities begin, and the market responds very positively. This according to Mark Hulbert in a recent Barron’s article. Hulbert cites the countries “saber-rattling directed at North Korea and Syria” as recent examples corresponding to a dip in the Dow Jones Industrial Average (Validea note: this as of April 20th—the index has since picked… Read More

Batten Down the Hedges?

August, typically one of the slowest months for Wall Street, has the reputation for being one of the more unstable for the financial markets. This according to an article in last week’s Investment News., which reported that last week DoubleLine Capital chief executive Jeffrey Gundlach suggested gold and gold miner stocks as a hedge against “the mounting risk across virtually all other markets and asset classes.” Gundlach says, “the stock markets should be down massively… Read More