Goldman Sachs strategists stated that as investors shift towards bonds and other assets, the expected annual nominal total return rate for the US stock market in the next 10 years is projected to be only 3%, significantly lower than the 13% of the past 10 years. They believe that there is a 72% chance that the S&P 500 Index may underperform US Treasury bonds in the future, and a 33% chance of trailing inflation before 2034. Investors should prepare for stock returns in the next 10 years to be close to the lower end
According to the information obtained by Zhitong Finance, Goldman Sachs strategists stated that as investors turn to other assets, including bonds, to seek higher returns, the U.S. stock market is unlikely to maintain its performance above the average level of the past 10 years. Analysis by strategists such as David Kostin shows that the S&P 500 Index is expected to have a nominal total return rate of only 3% over the next 10 years. In comparison, the growth rate of the past 10 years was 13%, with a long-term average growth rate of 11%.
They also believe that the likelihood of the benchmark index underperforming U.S. Treasuries is about 72%, and the likelihood of underperforming inflation before 2034 is 33%. The team wrote in a report dated October 18th: "Investors should be prepared for stock returns over the next 10 years to be close to the lower end of their typical performance distribution."
After the global financial crisis, the U.S. stock market rebounded, first driven by near-zero interest rates, and later by bets on the resilience of economic growth. According to compiled data, the performance of the S&P 500 Index is expected to outperform other regions globally in 8 out of the past 10 years.
However, this year's 23% gain is mainly concentrated in a few of the largest tech stocks. Goldman Sachs strategists stated that they expect the return rate to expand over the next 10 years, with the average weighted performance of the S&P 500 Index outperforming the market-cap weighted benchmark. They said that even if the rally continues to be concentrated, the return rate of the S&P 500 Index will be lower than the average level of around 7%.
Surveys show that investors expect the rebound of the U.S. stock market to continue until the final stage of 2024. It is believed that the strength of U.S. corporate performance is more critical to the stock market performance compared to who wins the U.S. presidential election or the policy direction of the Federal Reserve