The bull market in US equities will live to celebrate its 11th anniversary in 2020, according to David Kostin, Goldman Sachs Research’s chief US equity strategist. While questions surrounding the presidential election are likely to limit gains early in the year, Kostin sees the S&P 500 rallying once the political uncertainty is lifted to end the year at 3,400. Core to his outlook is a forecast for corporate earnings to grow about 5 percent and for the multiple that investors are willing to pay for those earnings to hold steady. “The idea of the fundamentals is really critical in terms of discussions with clients,” Kostin says in the latest installment of the Exchanges at Goldman Sachs podcast. “Each portfolio manager with whom I speak has different assumptions, based both on their own political biases as well as their own forecast of what’s likely to take place based on polling data, etc. And so really the fundamentals come down to, ‘What is the likely path of profits, and how are we going to value those profits?’”
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This podcast was recorded on December 20, 2019 and January 2, 2020.
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