Seeking Alpha

Goldman responds to clients on overvaluation call

  • 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
Comments (8)
  • bbro
    , contributor
    Comments (9319) | Send Message
     
    Looking at averages it fraught with danger unless you know where you are in the business cycle....
    21 Jan, 12:19 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1555) | Send Message
     
    bbro, where are we in the business cycle?
    21 Jan, 12:22 PM Reply Like
  • bbro
    , contributor
    Comments (9319) | Send Message
     
    we are 10 minutes into the second quarter or bottom of the fourth inning....
    21 Jan, 12:29 PM Reply Like
  • idkmybffjill
    , contributor
    Comments (1555) | Send Message
     
    bbro, I never understood baseball and still don't. In layman's terms please? Lol.
    21 Jan, 12:34 PM Reply Like
  • bbro
    , contributor
    Comments (9319) | Send Message
     
    36 minutes into the the first half of a soccer match??
    21 Jan, 12:43 PM Reply Like
  • Alan Johnson
    , contributor
    Comments (166) | Send Message
     
    Goldman may be right. On the other hand, they may be wrong.

     

    So what's the benefit of these forecasts?
    21 Jan, 12:23 PM Reply Like
  • Chris Lau
    , contributor
    Comments (1581) | Send Message
     
    Asymmetric risks are far higher in tech post-IPOs ie (TWTR), far lower with basic materials and gold. The prudent investor should load up on cash and enter positions as good opportunities make themselves available.
    21 Jan, 01:12 PM Reply Like
  • Laryno
    , contributor
    Comments (8) | Send Message
     
    Goldman definitely did this to try and reverse the losses sustained by their seasonal models; an interesting discrepancy between their proprietary trading and their client's portfolios.
    21 Jan, 02:30 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|