S&P 500's decade of big gains is over, Goldman says
More concretely, the bank forecasts that the index will deliver a nominal annualized return of just 3% over the next decade, significantly lower than the 13% annualized return seen in the past 10 years. Adjusted for inflation, the real return is expected to be around 1%, ranking the forecast in the 7th percentile of historical 10-year returns since 1930.
Market concentration plays a key role in long-term return forecasts. Goldman argues that the concentration of gains in a few mega-cap companies, particularly in the tech sector, raises concerns about sustained growth. The outlook for U.S. equities is further challenged by competition from other assets. Goldman highlights that the combination of its 3% forecast and the current“Excluding concentration, the probabilities of underperforming would be 7% and 1%, respectively,” Goldman said in the report.
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