Goldman Sachs latest estimate for the S&P 500
- will deliver an average annualized total return of 6% during the next 10 years
- Distributions best describe the potential path of the market and reflect the uncertainty inherent in forecasting the future. Returns of 2%-11% capture one standard deviation around our mean estimate.
GS point to their track record forecasting:
- In July 2012, we predicted US equities would generate an 8% annualized return during the coming 10 years, with a range of 4%-12%. S&P 500 actually returned 13.6% annually since we published our report eight years ago.
Pretty good.
GS with more:
- Our equity return forecast combined with the current record low 0.7% ten-year US Treasury yield suggests stocks have a greater than 90% likelihood of outperforming bonds through 2030. In this report, we use five approaches to forecast prospective equity returns: (1) starting absolute valuation, (2) starting relative valuation, (3) aggregate equity allocations, (4) dividend yield and growth, and (5) economic modelling. Each approach has its benefits and drawbacks. De-globalization, tax rates, margins, demographics, and constituent turnover in equity indices represent risks to our forecast.
