Goldman SachsCyclical stocks have now "generally reflected a strong economic rebound", but higher inflation expectations are expected to be good for value stocks, which have so far "lagged behind", he said. The bank's strategists believe that valuations and returns are better in Europe than in the US.

Equity strategists such as Peter Oppenheimer argue that unprofitable long-term companies are "still trading at very high valuations" and that the market, cash-generating technology and other high-quality defensive sectors are "starting to generate value".

The focus on decarbonization and infrastructure spending is "expected to respond to relative valuation shifts in many valuable areas of the market".

The performance of the United States is "questionable", and Goldman Sachs believes that Europe and some emerging market countries can provide better opportunities.

Goldman Sachs said market returns were "exceptionally strong" during the "hope" phase of the cycle over the past year.