Buyers should not count on the bull run in stocks and different property to proceed at present ranges, in response to Goldman Sachs CEO David Solomon.
Equities are on observe to take pleasure in three straight years of double-digit returns, as measured by the S&P 500, thanks in half to the extraordinary help supplied by the Federal Reserve and different central banks on the onset of the coronavirus pandemic. That increase has spilled over into different property, together with actual property, artwork and cryptocurrencies.
“We would expect that we’re not going to see the same rate of returns in equities and many other assets over the next few years that we’ve seen over the last couple of years,” Solomon mentioned Tuesday in response to a query from Joe Kernen on CNBC’s “Squawk Box.”
“I’m not a believer that double-digit equity returns compounding in perpetuity is something as an investor you should expect,” Solomon mentioned. “I’ve been involved with a number of investment committees and charitable foundations, college boards, etc, and certainly my mindset is the returns we’ve received over the last three to five years are different than what we should expect as we go forward.”
Solomon, who leads one of many world’s premier international funding banks, was requested to weigh in on a slew of matters from inflation to bitcoin, China and the return to workplace work.
Whereas banks have rebounded from issues final 12 months that the pandemic would crimp income, Solomon mentioned that he nonetheless felt shares of Goldman had been comparatively undervalued. Goldman shares have surged about 48% this 12 months.
“Like any other CEO, you know, I think that my company and my stock is underappreciated and undervalued,” Solomon mentioned. “I think the earnings power of the traditional financial services sector is quite powerful, and we get very, very low multiple on those earnings.”
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