Is Goldman Sachs’ praise for stocks good for the market?
Add a big name name to the list of those evangelizing for stocks.
In a lengthy report Wednesday, Goldman Sachs strongly recommended stocks over bonds in the next few years. The main reason: Valuations have fallen so sharply after years of poor performance that equities could register big gains if the economy keeps recovering.
“The prospects for future returns in equities relative to bonds are as good as they have been in a generation,” wrote Peter Oppenheimer, the firm’s London-based chief global equity strategist.
“We think it’s time to say a ‘long good bye’ to bonds, and embrace the ’long good buy’ for equities as we expect them to embark on an upward trend over the next few years.”
The stock-vs.-bond debate has raged on Wall Street in the last few years. After a three-decade bull market in bonds, many professionals worry that fixed-income yields have fallen as low as they can go. A rise in interest rates in coming years could saddle fixed-income investors with painful losses.
Individual investors haven’t seemed to care. They yanked a net $2.6 billion from stock funds last week while pouring a net $9.1 billion into bond portfolios, according to the Investment Company Institute.
Who knows if the Goldman blessing will alter their view of the stock market.
Goldman, of course, has been in the news lately for an entirely different reason. In a widely read op-ed piece in the New York Times last week, a departing Goldman executive alleged that the firm had lost its moral compass, with empoyees more concerned about making money for the company than for its customers.
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