Goldman Sachs has formulated a strategy that could triple the market’s return within a year as volatility remains higher than normal including 11 new stock picks for the months ahead
Don’t expect the stock market’s whipsawing to subside anytime soon.
That’s the message from Goldman Sachs’ top equity strategists to clients as coronavirus-related headlines continue to fling the market around.
While the strategists do not expect a return of the ugly days in March when the economy first shut down, they foresee stocks being more fickle than normal in the months ahead.
Two key gauges show that volatility remains historically high following the historic crash in March. First, the S&P 500‘s price variation on a one-month basis — so-called realized volatility — is currently near 28, which is above its long-term average of 13.
Similarly, the CBOE Volatility Index (or VIX) that tracks options-market activity is near 33, higher than its long-run average of 19.
The investing implication of these trends is that equity investors are poised to get less bang for their buck after returns are adjusted for the risks taken.
“Consensus expects 9% upside to the typical stock over the next 12 months and volatility should remain elevated through the rest of the year, suggesting low risk-adjusted returns in the coming months,” said David Kostin, the chief US equity strategist, in …continued .
[Source: Business Insider]