Generational Dynamics World View

[John J. Xenakis]

** 11-Nov-2020 World View: Goldman Sachs predicts major market surges in 2021 and 2022

Goldman Sachs strategists are predicting huge stock increases
each of the next two years.

The S&P closed on Tuesday at 3545. Goldman is increasing its year-end
target to 3700 by end of 2020, 4300 by the end of 2021, and 4600 by
the end of 2022.

Goldman gives two reasons: the expected success of virus vaccines, and
the expectation of a divided Congress (preventing Biden from
implementing a lot of loony left policies).

This is an unbelievably dangerous prediction -- i.e., dangerous for
you.

Apparently the Goldman Sachs strategists, led by David Kostin, are not
bothered by the current level of the price/earnings ratio. The P/E
ratio has a historical average of around 14, and has been at
astronomically high levels in the 20-25 range for almost a decade,
indicating a large stock market bubble. The current S&P 500 P/E ratio
value is 39.81, which is so ridiculously high, there are no words to
describe it. (https://www.wsj.com/market-data/stocks/peyields)

But Kostin says stock prices are going to go even much, much higher
in the next two years, presumably pushing the P/E ratio up to 50 or
60.

Well, don't worry about that. Kostin and his team of "experts" has
an explanation:

Quote: "When thinking about the potential resolution of
today’s record valuation dispersion, investors often recall the
unwind of the tech bubble, which was characterized by a two-year
bear market and large negative absolute returns of the previous
market leaders. More often than not, however, value rallies tend
to occur in rising markets during which high valuation stocks also
rise but are outpaced by the lowest valuation firms. This ‘catch
up’ dynamic is what we expect will take place in coming months as
a vaccine is approved and distributed."

Hahahahahaha. This is all moronic garbage from someone who has no
clue what he's talking about. He's apparently dismissing the high P/E
ratio as no problem because of "the potential resolution of today’s
record valuation dispersion," by which I believe that he means: Don't
worry about high valuations, since some are low and some are high, so
it will all be resolved. And don't tell me that these are experts and
I'm not, because I used to write about jackasses like this in the
2000s decade, and they were too dumb to see the housing bubble and the
credit collapse. These people are really stupid, but they get paid a
lot of money to issue stupid opinions that people want to hear.

I'll repeat what I've said many times in the past: The size of the
global debt bubble continues to grow uncontrollably. We don't know
when that bubble will burst, but we can say for certain that it will
burst when everyone least expects it, and cause a massive
international financial crisis, including a stock market crash, which
means that a lot of people will lose their life savings overnight.
"If something can't go on forever, then it won't."

Here are some Goldman Sachs graphs:






-- Goldman Sachs has just boosted its S&P 500 target. Here’s why
https://www.marketwatch.com/story/goldma...1605095051
(Market Watch, 11-Nov-2020)