本周早些时候，高盛发布了对美股未来十年的展望，暗示①Goldman Sachs predicts that after experiencing a decade of high growth, US stocks will face a "lost decade"; ②Long-time bull on Wall Street, Ed Yardeni, believes that Goldman Sachs' forecast of low returns for US stocks in the next decade is too conservative; ③He believes that the next decade will see a stock market prosperity reminiscent of the "roaring twenties".
Just as the US stocks hit new highs, a recent report from Goldman Sachs has sparked discussions about the outlook for US stocks. The bank predicts that after experiencing a decade of high growth, US stocks will face a 'lost decade'.
In response, Ed Yardeni, the President of Yardeni Research, a long-time bull on Wall Street, stated that Goldman Sachs' forecast of low returns for US stocks in the next decade is too conservative.
Earlier this week, Goldman Sachs released its outlook for the US stocks in the next ten years, implying$S&P 500 Index (.SPX.US)$that the average annual return on investment will only be 3%, with a potential range between -1% and 7%.
Yardeni does not agree with this forecast. He has been maintaining that due to the continuous improvement in productivity over the past two years, the US stock market is about to experience a prosperity similar to the "roaring twenties".
"In our view, even Goldman Sachs' optimistic expectations may not be optimistic enough." Yardeni stated in a report on Tuesday.
Yardeni stated that with the US economy growing at a rate of 3% per year, coupled with inflation dropping to around 2%, the average annual return of US stocks in the next decade should be close to 11%.
"Just looking at the compounded return from dividend reinvestment, it is hard to imagine that the future return rate of the S&P 500 index will be only 3%." Yardeni expressed.
Goldman Sachs' expectation of low returns on US stocks in the next ten years is mainly based on the fact that the market is highly concentrated in a few stocks.
But Adney believes that from a fundamental perspective, this is reasonable.
"Although the information technology and communications services sectors currently account for around 40% of the total market value of the S&P 500 index, similar to the peak of the Internet bubble period, the fundamentals of companies in these sectors are much more robust than at that time." Adney said. He explained that these two sectors account for over a third of the profitability of the S&P 500 index, compared to less than a quarter when the Internet bubble peaked in 2000.
Furthermore, the definition of technology companies has also changed, as technology permeates all industries, which helps drive productivity prosperity, supporting economic growth and suppressing inflation.
Overall, Adney believes that the next decade will see a stock market boom reminiscent of the "Roaring Twenties".
Throughout the 1920s, the stock market's increase far outpaced the pace of real economic development. Against the backdrop of a 50% rise in GNP, $Dow Jones Industrial Average (.DJI.US)$Increased by about three times.
"Thanks to higher profit margins brought by technological productivity growth, if earnings and dividends continue to grow at a steady pace, US stocks are unlikely to experience a 'lost decade.'" Adney said.
US stocks fell on Wednesday as rising US bond yields weighed on large stocks and investor confidence in a significant Fed rate cut diminished. At the close, the S&P 500 index fell 53.78 points, or 0.92%, to 5797.42 points. So far this year, the benchmark index has set 47 closing highs, with a cumulative increase of over 22%.
Editor/Rocky
