Economy: Goldman Sachs predicts a difficult decade for US markets and bets on the rest of the world

End of an era? According to Goldman Sachs, the US economy and stocks may face a difficult decade. In a recent report, the investment bank predicts that US markets will underperform over the next 10 years their international counterparts. Who is to blame? Excessive concentration on a few tech giants and historically high valuations. That’s why.

Key points of this article:

• Goldman Sachs predicted a difficult decade for US stocks due to overconcentration on a few technology giants and high ratings.
• Despite concerns about the US market, Goldman Sachs sees more encouraging earnings for Europe, Japan and emerging markets, thanks to China and India.

Goldman Sachs sounds the alarm in Fortune magazine: american economy too concentrated on several tech superstars such as Nvidia , Apple , Microsoft and Alphabet . And this dependence can backfire on investors, because if these giants suffer failures the entire market may suffer.

Report by Goldman Sachs, prepared Peter Oppenheimer indicates that US stocks can only yield on average 6.5% annual profitability during next decade which is significantly lower than the historical median value in 9.3% . This is due to already very high initial valuations, with a price-to-earnings (P/E) ratio 23x compared with 19x for the rest of the world.

Europe, Japan, India and China could benefit from an economic downturn in the United States

The rest of the world could benefit from a slowdown in the US economy. However, although United States may experience a temporary decline, the rest of the world may paradoxically achieve better results. Goldman Sachs forecasts annual returns 7.1% for of Europe and 8.2% for of Japan . Emerging markets, driven by China and India, may even catch up 11% .

This divergence several explain factors . Firstly, international markets benefit from higher GDP growth and corporate governance reforms. Second, the expected weakening of the dollar should help stocks non-US companies . Finally, AI, while dominated by the United States, could benefit other regions in the long run.

For Goldman Sachs diversification is more important than ever. To investors opportunities outside the US should be sought. Europe , Asia and emerging markets offer attractive prospects far from the tech bubble that threatens the economy USA .

While U.S. stocks have dominated global markets for decades, that era may be coming to an end. Investors would be wise to diversify their portfolios and look to less concentrated markets with more reasonable valuations. Will the next decade be the decade of internationalization? This topic begins to appear more and more often … we will find out in a few years.

Source: journalducoin.com