Goldman warns of a lost decade for US stocks – The Irish Times

Are US stocks on track to have a lost decade? Goldman Sachs expects the bull market to continue into next year, but that’s where the good news ends.

We may be in for a lost decade, as the S&P500 is forecast to deliver annual returns of just 3 percent over the next 10 years.

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Why? First, the assessment. The index’s annual return over the past decade has been 13 percent, resulting in a very high valuation. Second, the US is dominated by a few mega-cap tech companies such as Apple and Nvidia, leaving the stock market more concentrated than at any time in the last century.

When a market is dominated by a few large companies, stock prices should reflect higher risk and volatility at lower valuations, Goldman says.

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Some analysts say Goldman’s forecast is overly pessimistic. However, US stocks have outperformed for over 16 years, the longest period of outperformance in history. Investors accustomed to stellar returns could be in for a tougher decade.

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