A note on Wednesday from Goldman Sachs reiterates the firms projection for the S&P500 to rise to 4,500 by year-end 2023 and to 4,700 in 12 months.

Goldman Sachs do, however, add a but. Analysts at the firm acknowledge that some portfolio managers expect a recession to begin within the next year. While GS economists put that probability at 25%., the analysts do offer 5 reasons why to add downside protection:

  1. put-call skew indicates that upside positioning is crowded and downside protection is attractively priced
  2. the "narrow market rally suggests drawdown risk is elevated."
  3. equity valuations are elevated
  4. equities are already pricing an optimistic economic growth outlook
  5. positioning is no longer being a tailwind to U.S. equities

(Reason 6 is the spread GS will take on selling downside protection to you but I better not say that)

shut mouth zip 22 June 2023