Goldman Sachs Predicts Low S&P 500 Returns

Goldman Sachs forecasts that the S&P 500 will yield an annualized nominal return of just 3% over the next decade, a sharp decline from the 13% average seen in the past ten years. This prediction ranks in the 7th percentile of 10-year returns since 1930 and is attributed to high market concentration in a few tech stocks and a high starting valuation, with the CAPE ratio at 38 times. While Goldman Sachs is pessimistic, JPMorgan Asset Management finds this view too negative. Goldman further suggests there's a 72% chance the S&P 500 will underperform bonds and a 33% chance of underperforming inflation. The firm highlights potential GDP contraction and the risk of volatility due to the market's reliance on a few large companies. Despite recent bullish performance, including a 27% annual return over the past two years, Goldman warns that such returns are not sustainable long-term.