GOLDMAN SACHS: Stock returns are expected to decline over the next few years

Although it has not yet emerged from the epidemic, it has undoubtedly brought good investment returns to investors due to a number of factors such as economic restart, universal vaccination, strong performance of US companies, and large-scale stimulus measures.

According to the S&P 500 index, the stock is expected to achieve double-digit returns for three consecutive years, with the S&P 500 up 27% year-to-date and 107.45% in the past five years. Not only THE US stock market, but also real estate, art, etc. have brought many benefits to investors.

Goldman Sachs CEO David Solomon sounded the alarm for investors on CNBC's "Squawk Box" show on Tuesday, saying investors should not expect the bull market in stocks and other assets to continue at current levels.

We don't expect to see stocks and many other assets return the same rate of return in the coming years as we have in years past, and I don't believe double-digit stock returns are something you should expect as an investor forever. I've been involved with a number of investment committees and charitable foundations, university boards, etc., and of course my mindset is that the returns we've received over the last three to five years are different from the returns we should expect in the future.

While the banking sector has rebounded from last year's fears that the pandemic will weigh on revenues, Solomon said he still believes Goldman's stock is relatively undervalued. Goldman's stock price has soared about 48 percent so far this year.

Like other CEOs, you know, I think my company and my stock are undervalued, and I think the profitability of the traditional financial services industry is pretty strong, and we get very, very low multiples on those earnings.

Earlier, Goldman Sachs strategist David Kostin predicted that the S&P 500 would extend its rally and was expected to hit a high of 5100 points in 2022. He pointed out that the momentum of the rise is mainly due to the continuous rise in profits of US companies.

However, he also said that "slowing economic growth, fed tightening policy and rising real yields suggest that U.S. stocks should return slightly below average next year." ”

Historically, in an environment of positive but slowing economic activity and rising real interest rates, the S&P 500 has returned an average of 8% in 12 months.

Morgan Stanley, one of Wall Street's most pessimistic investment banks, expects the baseline S&P 500 at 4400 by the end of 2022, and equity strategist Wilson Mike Wilson said he remains cautious given tighter financial conditions and slower earnings growth, so he remains cautious given that tighter financial conditions and slower earnings growth look unattractive at current levels.

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