Goldman Sachs predicts 3%
Goldman Sachs predicts 3%
Hey guys,
Goldman Sachs have predict that u.s stock will be around 3% annually for the next decade.
What can be done to improve that number assuming it will be correct?
Does a world index with u.s being at 50-60% of all stocks will perform better?
Goldman Sachs have predict that u.s stock will be around 3% annually for the next decade.
What can be done to improve that number assuming it will be correct?
Does a world index with u.s being at 50-60% of all stocks will perform better?
Re: Goldman Sachs predicts 3%
My time machine is broken. I'll let you know after I get it fixed.
The question isn't at what age I want to retire, it's at what income. |
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Re: Goldman Sachs predicts 3%
Raising your savings rate and plan on spending less in retirement are two ways help with having enough money to retire
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Re: Goldman Sachs predicts 3%
This is why I diversify with international stocks. Maybe US stocks will outperform forever, maybe they won't. No one really knows (even the smart people at Goldman Sachs).
Last edited by firegooner on Wed Oct 23, 2024 2:07 pm, edited 1 time in total.
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Re: Goldman Sachs predicts 3%
Here's a good analysis of the 3% prediction: https://www.independentvanguardadviser. ... -forecast/
Bottom line, if you don't want to read the analysis: "But how much consideration should you give these forecasts and projections? Very little."
Bottom line, if you don't want to read the analysis: "But how much consideration should you give these forecasts and projections? Very little."
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Re: Goldman Sachs predicts 3%
Real or nominal?
IMHO, Investing should be about living the life you want, not avoiding the life you fear. |
Run, You Clever Boy! [9085]
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Re: Goldman Sachs predicts 3%
Diversify away from US Equities?
If I were to take that prediction seriously I would probably move towards a 60/40 allocation with global weighted caps on equities.
Maybe beef up on BND/VBTLX.
For my personal situation, it might mean shifting 10% from one fund to another at some point in 2025.
If I were to take that prediction seriously I would probably move towards a 60/40 allocation with global weighted caps on equities.
Maybe beef up on BND/VBTLX.
For my personal situation, it might mean shifting 10% from one fund to another at some point in 2025.
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Re: Goldman Sachs predicts 3%
The market doesn't care about Goldman's predictions, which are usually worse than coin flips:
"In a research note out this week, Goldman Sachs’ top strategists predict that stocks will once again disappoint next year. Goldman predicts the S&P 500 will go nowhere in the coming year, ending 2016 at 2,100. The stock market index is already at 2,090."
https://fortune.com/2015/11/25/goldman- ... ions-2016/
"In a research note out this week, Goldman Sachs’ top strategists predict that stocks will once again disappoint next year. Goldman predicts the S&P 500 will go nowhere in the coming year, ending 2016 at 2,100. The stock market index is already at 2,090."
https://fortune.com/2015/11/25/goldman- ... ions-2016/
Re: Goldman Sachs predicts 3%
Since when is this company ever right about any prognostication? The answer is never.
Retiree mantra: keep your stock allocation below your risk tolerance and do not kid yourself about your risk tolerance.
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Re: Goldman Sachs predicts 3%
Savings rate trumps (almost?) everything else regarding retirement preparedness.
Early-retired ... portfolio AA 50/50 ... (46% tIRA, 33% RIRA, 16% taxable, 5% HSA) ... (16% SCHB, 16% VTI, 13% SCHF, 5% VITSX, 50% US Treasuries).
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Re: Goldman Sachs predicts 3%
The real question is: what are they do with their personal accounts? We'll never know.
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Re: Goldman Sachs predicts 3%
Once reality sets in the market drops 40% in the coming year... The reset that most all are anticipating....
THEN we will get back on the right track with gains going forward of about 5-9% per year.
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Re: Goldman Sachs predicts 3%
Their prediction is well aligned with Jack Bogle's wisdom.
We have had a period of above historical average returns since 2009. While the next decade could continue the trend, reversion to the mean is what history would predict has to happen eventually. The longer we go without that happening the more the reversion has to be if we are to return to historical levels of investment return.
So 3% might be a shot in the dark, but its in the right direction.
As to retirement, I find most FIRE and some retirement planning today is based in overly favorable assumptions.
I would construct a scenario based on the 3% return, and see what happens in portfolio modeling software.
If you prepare for 3% and get 10% you will live well. If you prepare for 10% and get 3% you may work much longer than planned and live sparsely. Prepare for the worst, enjoy the best.
We have had a period of above historical average returns since 2009. While the next decade could continue the trend, reversion to the mean is what history would predict has to happen eventually. The longer we go without that happening the more the reversion has to be if we are to return to historical levels of investment return.
So 3% might be a shot in the dark, but its in the right direction.
As to retirement, I find most FIRE and some retirement planning today is based in overly favorable assumptions.
I would construct a scenario based on the 3% return, and see what happens in portfolio modeling software.
If you prepare for 3% and get 10% you will live well. If you prepare for 10% and get 3% you may work much longer than planned and live sparsely. Prepare for the worst, enjoy the best.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Goldman Sachs predicts 3%
I don't think even Goldman Sachs believes the 3% number.
If they expected that the stock market would return 3% over the next ten years, they would sell all their stock and buy 10-year Treasury bonds, which yield 4.24% risk-free, and advise their clients to do the same.
If they expected that the stock market would return 3% over the next ten years, they would sell all their stock and buy 10-year Treasury bonds, which yield 4.24% risk-free, and advise their clients to do the same.
Re: Goldman Sachs predicts 3%
This isn’t far from what Bogle predicted in his last years. Even he was wrong.
All of these predictions assume some level of historical mean reversion.
All of these predictions assume some level of historical mean reversion.
Re: Goldman Sachs predicts 3%
This is the correct answer.Johm221122 wrote: ↑Wed Oct 23, 2024 2:03 pm Raising your savings rate and plan on spending less in retirement are two ways help with having enough money to retire
The other answer that is often given is to load up on risk and stretch for those returns.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Re: Goldman Sachs predicts 3%
I would assume real. That is in line with various P/E measures. They are high.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
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Re: Goldman Sachs predicts 3%
The future is unknown and unknowable.
They could be right, just as a broken clock is right twice a day.
Even if the average is correct, the sequence of returns that gets to that average will present many opportunities and challenges.
When I turned 50, I attended MegaCorp's retirement seminar, presented by an actuary consultant. During a break, I told him that, with relatively modest changes in assumptions, I either died penniless or left my heirs millions. He said "What's wrong with this? Work until you're not having fun any more, then live off of what you have."
It turns out that the Sequence of Returns gods smiled upon me and my heirs and charities will be well provided for despite our spending what we want doing what we want in retirement. There was no way of knowing we would end up like this.
This leads to what others have said. All you can control is what you save and how you invest it.
They could be right, just as a broken clock is right twice a day.
Even if the average is correct, the sequence of returns that gets to that average will present many opportunities and challenges.
When I turned 50, I attended MegaCorp's retirement seminar, presented by an actuary consultant. During a break, I told him that, with relatively modest changes in assumptions, I either died penniless or left my heirs millions. He said "What's wrong with this? Work until you're not having fun any more, then live off of what you have."
It turns out that the Sequence of Returns gods smiled upon me and my heirs and charities will be well provided for despite our spending what we want doing what we want in retirement. There was no way of knowing we would end up like this.
This leads to what others have said. All you can control is what you save and how you invest it.
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Re: Goldman Sachs predicts 3%
If I had a dollar for every time GS made a prediction...
RM
RM
I figure the odds be fifty-fifty I just might have something to say. FZ
Re: Goldman Sachs predicts 3%
First they sow fear.
Then they sell you hope -- that they can do better for you.
Then they sell you hope -- that they can do better for you.
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Re: Goldman Sachs predicts 3%
Goldman has a continuum of talent. Who at Goldman Sachs said this, and what exactly did they say? What was the context they said it in?
I guess it depends on what you plan to do if you accept that person's assertion. If it keeps you from leaving a high paying job to retire with too little money at age 35, then I guess it's a good thing. If it causes you to own more than the S&P 500 or to save a bit more, also a good thing.
Re: Goldman Sachs predicts 3%
I am thinking definitely over 3.1% or may be considerably higher.
Re: Goldman Sachs predicts 3%
The odds are really good that in the next ten years, the stock markets will go down by 20%-40%, maybe 2-3 times in the next 10 years. If that happens, how is your personal return affected, if you buy stocks, when the markets are down by 30%?
Re: Goldman Sachs predicts 3%
One take on this prediction: https://ritholtz.com/2024/10/3-great-de ... 70s-2020s/
Vanguard annualized return projection for the next 10 years is 3.2% to 5.2%, nominal https://advisors.vanguard.com/insights/ ... rspectives
Vanguard annualized return projection for the next 10 years is 3.2% to 5.2%, nominal https://advisors.vanguard.com/insights/ ... rspectives
Re: Goldman Sachs predicts 3%
Nobody knows nothing, OP. Just continue earning (this is the most important), saving, and investing, and--God willing--all will turn out well. Predictions like Goldman Sachs's aren't worth the pixels that they're occupying on your computer screen.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Goldman Sachs predicts 3%
Well, they gave a 72% chance that Treasuries outperform S&P500.grabiner wrote: ↑Wed Oct 23, 2024 8:24 pm I don't think even Goldman Sachs believes the 3% number.
If they expected that the stock market would return 3% over the next ten years, they would sell all their stock and buy 10-year Treasury bonds, which yield 4.24% risk-free, and advise their clients to do the same.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
Re: Goldman Sachs predicts 3%
It was nominal in the story I read.
1% real assuming 2% inflation.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
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Re: Goldman Sachs predicts 3%
That article also answered the OP's question of what can be done:mbwalker98 wrote: ↑Wed Oct 23, 2024 2:06 pm Here's a good analysis of the 3% prediction: https://www.independentvanguardadviser. ... -forecast/
Bottom line, if you don't want to read the analysis: "But how much consideration should you give these forecasts and projections? Very little."
The bottom line is that the future is always unknowable. The logical answer is to hold a diversified portfolio that can do reasonably well in various market environments.
Re: Goldman Sachs predicts 3%
And what miraculous product could I possibly purchase from Goldman Sachs (I'm thinking something with a real high expense ratio) that will outperform their prediction of a 3% return?
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Goldman Sachs predicts 3%
Just to add, while I am awaiting the parts I need to fix my time machine, here is a good read from the White Coat Investor.
https://www.whitecoatinvestor.com/optim ... s-finance/
https://www.whitecoatinvestor.com/optim ... s-finance/
The question isn't at what age I want to retire, it's at what income. |
- George Foreman
Re: Goldman Sachs predicts 3%
TIPS are currently paying >1% real.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
Re: Goldman Sachs predicts 3%
Yes--Goldman Sachs is advising all of us to invest in TIPS.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Goldman Sachs predicts 3%
Oh, I'm sure they'll sex it up somehow with leverage or synthetic options or something.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
Re: Goldman Sachs predicts 3%
That's actually inconsistent with the predictions. Assuming a normal distribution of returns, a 72% probability that A outperforms B implies that the expected difference is 0.58 standard deviations. So if the stock market is expected to return 3% with a probability of 72% of earning less than 4.24%, it would have a standard deviation of 2.14%. That is much less than the historical volatility of stock returns over a ten-year period.watchnerd wrote: ↑Thu Oct 24, 2024 12:30 pmWell, they gave a 72% chance that Treasuries outperform S&P500.grabiner wrote: ↑Wed Oct 23, 2024 8:24 pm I don't think even Goldman Sachs believes the 3% number.
If they expected that the stock market would return 3% over the next ten years, they would sell all their stock and buy 10-year Treasury bonds, which yield 4.24% risk-free, and advise their clients to do the same.
Re: Goldman Sachs predicts 3%
Goldman. Sachs. Is. Selling. Products.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
Re: Goldman Sachs predicts 3%
I dont know that GS has a great track record in makgin such forecasts.
Re: Goldman Sachs predicts 3%
*shrug*grabiner wrote: ↑Thu Oct 24, 2024 8:02 pmThat's actually inconsistent with the predictions. Assuming a normal distribution of returns, a 72% probability that A outperforms B implies that the expected difference is 0.58 standard deviations. So if the stock market is expected to return 3% with a probability of 72% of earning less than 4.24%, it would have a standard deviation of 2.14%. That is much less than the historical volatility of stock returns over a ten-year period.
I'm just quoting the article.
Maybe 3% is the average with a lot of positive and negative spikes.
Last edited by watchnerd on Thu Oct 24, 2024 9:02 pm, edited 1 time in total.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
Re: Goldman Sachs predicts 3%
GS predicts. Maybe right maybe not. A broken clock is correct twice a day.
Low returns have been predicted for quite some time. See this. viewtopic.php?t=361118
Hasn’t been the case thus far.
Low returns have been predicted for quite some time. See this. viewtopic.php?t=361118
Hasn’t been the case thus far.
Re: Goldman Sachs predicts 3%
I don't mean to shoot the messenger here.watchnerd wrote: ↑Thu Oct 24, 2024 8:59 pm*shrug*grabiner wrote: ↑Thu Oct 24, 2024 8:02 pm
(Goldman Sachs forecasts 3% S&P 500 ten-year returns and 72% probability of underperforming Treasuries).
That's actually inconsistent with the predictions. Assuming a normal distribution of returns, a 72% probability that A outperforms B implies that the expected difference is 0.58 standard deviations. So if the stock market is expected to return 3% with a probability of 72% of earning less than 4.24%, it would have a standard deviation of 2.14%. That is much less than the historical volatility of stock returns over a ten-year period.
I'm just quoting the article.
Maybe 3% is the average with a lot of positive and negative spikes.
My point is that Goldman Sachs doesn't take the forecasting seriously enough to make a forecast which is mathematically consistent. Stocks having a lot of unexpected positive and negative spikes moves the chance of underperforming Treasuries closer to 50%; it could only be 72% if there were very little uncertainty in the stock returns.
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Re: Goldman Sachs predicts 3%
I predict that the market will have its ups and downs. I'll re-balance when necessary to keep my asset allocation.
If you think they mean a steady and constant 3% return over a decade, well, you are mistaken. If you think Goldman knows the future, then you're on your own.
If you think they mean a steady and constant 3% return over a decade, well, you are mistaken. If you think Goldman knows the future, then you're on your own.
https://www.merriam-webster.com/dictionary/abide
Re: Goldman Sachs predicts 3%
They don’t know squat.
Who was predicting. 20% for 2024 back in January?
I also don’t know squat. But at last I know that I don’t know. Don’t try to do anything with made up predictions, that you know are meaningless.
Who was predicting. 20% for 2024 back in January?
I also don’t know squat. But at last I know that I don’t know. Don’t try to do anything with made up predictions, that you know are meaningless.
Re: Goldman Sachs predicts 3%
I don't think anyone reasonable would expect a steady and constant 3% from stocks.retireIn2020 wrote: ↑Thu Oct 24, 2024 9:36 pm I predict that the market will have its ups and downs. I'll re-balance when necessary to keep my asset allocation.
If you think they mean a steady and constant 3% return over a decade, well, you are mistaken. If you think Goldman knows the future, then you're on your own.
They're not fixed income.
Global stocks, IG/HY bonds, gold & digital assets at market weights 78% / 17% / 5% || LMP: TIPS ladder
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Re: Goldman Sachs predicts 3%
build a big portfolio with a SWR of 2% or less will solve that problem.
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Re: Goldman Sachs predicts 3%
Exactly my point, and you did say "reasonable", which is relative.watchnerd wrote: ↑Thu Oct 24, 2024 10:02 pmI don't think anyone reasonable would expect a steady and constant 3% from stocks.retireIn2020 wrote: ↑Thu Oct 24, 2024 9:36 pm I predict that the market will have its ups and downs. I'll re-balance when necessary to keep my asset allocation.
If you think they mean a steady and constant 3% return over a decade, well, you are mistaken. If you think Goldman knows the future, then you're on your own.
They're not fixed income.
The OP stated
Which appears, and some might think 3% (oh my god, I have to get out of stocks).Goldman Sachs have predict that u.s stock will be around 3% annually for the next decade.
What one has to understand is the S&P 500 could be +20% one year and -20% the next. IMO, ideal times to rebalance along the way over that decade.
Isn't this the purpose of having an asset allocation that reflects our risk tolerance?
Last edited by retireIn2020 on Thu Oct 24, 2024 10:45 pm, edited 1 time in total.
https://www.merriam-webster.com/dictionary/abide
Re: Goldman Sachs predicts 3%
Great thought- good way to end the day!Harmanic wrote: ↑Thu Oct 24, 2024 1:00 pm Just to add, while I am awaiting the parts I need to fix my time machine, here is a good read from the White Coat Investor.
https://www.whitecoatinvestor.com/optim ... s-finance/
Re: Goldman Sachs predicts 3%
So how have “most all” acted on this anticipation?tesuzuki2002 wrote: ↑Wed Oct 23, 2024 3:50 pm
Once reality sets in the market drops 40% in the coming year... The reset that most all are anticipating....
Re: Goldman Sachs predicts 3%
Sometimes the story is in what is NOT told!?
What would then: 11th and 12th, 13th year performances be?:
38%, 29% and 34% respectively!?
What would then: 11th and 12th, 13th year performances be?:
38%, 29% and 34% respectively!?
Re: Goldman Sachs predicts 3%
*Sighs* I take these predictions with a grain of salt. Having said that, looking back over the last 80 years of market data, there appears to be a pattern of two decades of market growth followed by a lost decade. Following WWII we had two decades of growth (50s and 60s) followed by a lost decade (70s), then followed by two decades of growth (80s and 90s), then follow by another lost decade (2000s). So far we have had growth in the market since 2009. So I suspect we may see another lost decade in the 2030s.
Wealth is not about having a lot of money; it's about having a lot of options.