Correction in equities would be a buying opportunity, Goldman says

Bank's strategists cite signs that markets are headed for a drop of 10% to 20% in coming months.
JAN 29, 2018
By  Bloomberg

Goldman Sachs Group Inc. predicts a correction in global stocks is on the horizon, but says any such pullback would be a buying opportunity. Strategists at the U.S. bank say signals are flashing for a drop of 10% to 20% in equity prices in the coming months. Goldman's risk appetite gauge is hovering near a record high, indicating a sharp rise in investor optimism, while traders seem complacent about political risks like Italy's national elections, they say. Still, the risk of a full-blown bear market is viewed as low, as strong and synchronized global growth provides a reason to stay bullish. "We do not believe that this would be prolonged or morph into a bear market," strategists including Peter Oppenheimer wrote in a note on Monday. "Historically, there are many examples of corrections that are short-lived and do not turn into more drawn-out bear markets that are typically associated with economic weakness." Goldman, which remains overweight global equities, defines a bear market as a drop of 20% or more. (More: 2018 outlook on equity investing is mostly bright) The amount of value added to U.S. equities in January is poised to exceed any month on record, data compiled by Bloomberg show, while the MSCI All-Country World Index is trading near an all-time high, buoyed by optimism over growth and corporate profits. While the recent strength of global stocks does not mean they must enter a correction phase, it suggests one is overdue, Goldman says. "Rising valuations, amid increased optimism, make the market more vulnerable to a setback even if the underlying trend remains intact," the strategists wrote. (More: Are your clients ready for higher volatility?)

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave