- Goldman is dealing with some upset clients after its overvaluation call on the S&P 500 last week.
- "Most client responses attempted to justify personal expectations for continued multiple expansion in 2014 ... The low interest rate backdrop was the most common client justification for continued P/E expansion." Goldman, however, looks at P/E's vs. real rates over time and finds today's pricey no matter the rate environment.
- "Many on the buy-side expect price gains of 10% to 20% this year ... the fact remains that market has rarely traded at a higher P/E outside of the tech bubble, or coming out of recessions when EPS were extremely low."
- Attached charts
- S&P ETFs: SPY, IVE, SH, SSO, SDS, IVV, SPXU, UPRO, VOO, MDY, RSP, MVV, RWL, IJH, EPS, IVW, SPYG, RWK, RPG, UMDD, RPV, SPYV, BXUB, VOOG, IVOO, VOOV, MZZ, TRND, BXUC, SFLA, SMDD, FTA, MYY, BXDB
Goldman responds to clients on overvaluation call
Jan 21 2014, 12:07 ET