Analysts at Goldman Sachs are saying that it is next to impossible for stock prices to keep going up like they have been recently. Ever since Donald Trump’s surprise election victory in November, stocks have been on a tremendous run, but this surge has not been matched by a turnaround in the real economy. We have essentially had a “no growth” economy for most of the past decade, and ominous signs pointing to big trouble ahead are all around us. The only reason why stocks have been able to perform so well is due to unprecedented intervention by global central banks, but they are not going to be able to keep inflating this bubble forever. At some point this absolutely enormous bubble will burst and investors will lose trillions of dollars.
The only other times we have seen stock valuations at these levels were just before the stock market crash of 1929 and just before the dotcom bubble burst in 2000. For those that think that they can jump into the markets now and make a lot of money from rapidly rising stock prices, I think that it would be wise to consider what analysts at Goldman Sachs are telling us. The following is from a CNBC article that was published on Monday…
Investors may be in for disappointing market returns in the decade to come with valuations at levels this high, if history is any indication.
Analysts at Goldman Sachs pointed out that annualized returns on the S&P 500 10 years out were in the single digits or negative 99 percent of the time when starting with valuations at current levels.
Do you really want to try to fight those odds?
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