Goldman Sachs: S&P 500 to average +3% over next 10 years?

Goldman Sachs is no better at predicting the future as anyone else. That said, it's good to be diversified beyond the S&P 500.
 
Goldman Sachs is no better at predicting the future as anyone else. That said, it's good to be diversified beyond the S&P 500.
"The only function of economic forecasting is to make astrology look respectable.” Often attributed to John Kenneth Galbraith but apparently actually from Ezra Solomon, a member of the Council of Economic Advisors during the Nixon administration.
 
I pay no attention to forecasts and refuse to make them myself.
 
I'll have a shot of what Mr Goldman and Mr Sachs are drinking.

The last time the SP500 has had such a bad run for even 3 consecutive years was 2000 thru 2002.
 
Goldman Sachs is now forecasting a 3% annualized return for the S&P 500 over the next 10 years: Decade of big S&P 500 gains is over, Goldman strategists say

Are you buying that?

Well, after my tremendously fortunate rookie FIRE year with the market this year, this makes me nervous, but it also seems pessimistic.
Pessimism is -3% per year over the next ten years and a 50% drop in the market for a year or so. That's not out of the question given the overpriced and frothy market. Bogle said not to expect 4% over the next decade, but he's dead!

Look what happened to Japan's market when they got overly crazy 30 years ago.
 
Yawn. I'm still waiting for that recession that never happened.
 
Yawn. I'm still waiting for that recession that never happened.
All US recessions occur when unemployment is high, and we are nowhere near that happening. And our Treasury Secretary said "no more recessions" (and we will bail out the failing banks if that happiness), which they did recently.
 
Could be, AFAIK Waren Buffet usually figures the economy grows at 4% to 5% and that is a baseline for proceeding. If one really believed that the economy will go up systematically at 3% or so then looks like the straedgy would be to buy on the dips?
 
Goldman Sachs is now forecasting a 3% annualized return for the S&P 500 over the next 10 years: Decade of big S&P 500 gains is over, Goldman strategists say

Are you buying that?

Well, after my tremendously fortunate rookie FIRE year with the market this year, this makes me nervous, but it also seems pessimistic.
Seems plausible given how overvalued the equity markets are. It is also consistent with Vanguard's forecasted return for the equity markets for 2024-2033 at the end of 2023.

But on the other hand, nobody knows nothing.
 
The article mentions returns over the last 10 years of 13%, vs the long term rate of 11%.
Looking at just the last 6 years, returns have averaged 16-17%.

"Reversion to the mean" is a thing.

I think odds are pretty darn high the next 6 years will not be as good as the last 6. And I'd guess there is a decent chance that returns over the next 5-10 years will be below the long term rate. I have no idea if that means 3% or 7% or whatever returns - and I may be totally wrong - but I'm guessing some mean reversion is in our future.
 
Could be, AFAIK Waren Buffet usually figures the economy grows at 4% to 5% and that is a baseline for proceeding. If one really believed that the economy will go up systematically at 3% or so then looks like the straedgy would be to buy on the dips?
The stock market is not the economy and the economy is not the stock market.
 
The stock market is not the economy and the economy is not the stock market.
Exactly,the stock market more likely resembles a casino with the vast majority of gambling done by very large institutions with computer program algorithms running the trading.
 
I’ll buy it. What I won’t buy is that GS can accurately forecast this. Self serving clickbait headline to goad investors into paying management fees. Harsh? Ok, I guess I really should read the article.

Ok, read it. The comments were more informative than the article. I’m good.
 
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Seems plausible given how overvalued the equity markets are. It is also consistent with Vanguard's forecasted return for the equity markets for 2024-2033 at the end of 2023.

But on the other hand, nobody knows nothing.
Ah but what was Vanguard's forecast for the 2020 decade? I am sure they made one and I am sure it is probably way off (to date).
Sounds like the goalposts keep moving outward in order to achieve the conservative results.
Of course, once in a while they will be correct.
Yes nobody knows nuthin as per Mr. Bogle.
 
Exactly,the stock market more likely resembles a casino with the vast majority of gambling done by very large institutions with computer program algorithms running the trading.
Even if so, the small guy can still win over time, as he is not competing typically as a day trader.
 
Exactly,the stock market more likely resembles a casino with the vast majority of gambling done by very large institutions with computer program algorithms running the trading.
The stock market is not a "casino". That implies that nobody can make money. The reality is that the stock market is arguably the greatest liquid asset you can invest in. Investor behavior is where people get in trouble and ultimately lose.
 
The stock market is not a "casino". That implies that nobody can make money. The reality is that the stock market is arguably the greatest liquid asset you can invest in. Investor behavior is where people get in trouble and ultimately lose.
It's gambling because the retail investor does not have all the information available to make accurate decisions. You are clearly making bets on securities that can go up or down in value depending on company performance, in which that performance can be dictated by company management decisions (good or bad) or outside variables not in their control.
 
Short term (maybe 5 years and shorter) asset prices are best viewed as random and speculation as a zero-sum game. Longer term, asset prices have a positive trend, which is why buy-and-hold (aka "investing") works.
 
It's gambling because the retail investor does not have all the information available to make accurate decisions. You are clearly making bets on securities that can go up or down in value depending on company performance, in which that performance can be dictated by company management decisions (good or bad) or outside variables not in their control.
Here's the thing though. With the creation of ETF's you can just buy the whole market and not have to concern yourself with individual companies management decisions or anything else not in your control. To me , that is such a relief!

You can just have returns that represent what the market does, which as history has shown done extremely well. Also, with minimal cost and in a tax efficient way. Individual investors have never had it so good.
 
Here's the thing though. With the creation of ETF's you can just buy the whole market and not have to concern yourself with individual companies management decisions or anything else not in your control. To me , that is such a relief!

You can just have returns that represent what the market does, which as history has shown done extremely well. Also, with minimal cost and in a tax efficient way. Individual investors have never had it so good.
Small correction: Early on, ETFs were exclusively index funds in a form that allowed them to be traded like stocks. This encouraged trading and, hence, revenue for the brokerage houses. The first widely available index fund was created in approximately 1975 by Jack Bogle. The availability of index funds beginning almost 50 years ago has nothing to do with the invention of ETFs. ETFs are no longer limited to index funds either.
 
Here's the thing though. With the creation of ETF's you can just buy the whole market and not have to concern yourself with individual companies management decisions or anything else not in your control. To me , that is such a relief!

You can just have returns that represent what the market does, which as history has shown done extremely well. Also, with minimal cost and in a tax efficient way. Individual investors have never had it so good.
Yes. It is a casino, and the only one that will give the bettor an edge. S&P500 has never had a losing 30 year period. That is as close as you can get to a sure thing. Invest monthly over time in index funds and invest as much as you can and you will do well. If US industry fails there will not be anyone else doing much better. We are nowhere near the Japan bubble where 50% of all worldwide market capitalization traded on the Tokyo exchange and the land under the imperial palace in Tokyo (1.15 sq km) was worth more than all the land in California!!!
 
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