Goldman Sachs 2013 Outlook

2013 Outlook Over the Horizon. Goldman Sachs sees interests rates staying low for a long time, despite having no nominal return for the foreseeable future.  They cite the 11.5 year period from 1939 when interest rates remained below 2.5%.  Cumulative asset class returns from 2009 are included, with 2012 showing continued growth in many sectors.  US Equity leads the pack form 2009 (+136%) while EM Equity led for 2012 (+18.6%).

Best investments for 2013 and 5 years out: EM debt, high yield debt, Euro Stoxx 50 equities and US bank stocks.  Hedge funds will have mid-single digit return, a wide-spread outlook.  They see a slight increase in world growth in 2013, led by emerging markets.  “Ongoing global growth should support earnings, providing a rising fundamental floor for equities.”  Page 10’s operating earnings vs. price chart says it all, stocks are incredibly undervalued.

Implied Total Return for 2013:

  • US equities:         1% – 6%
  • Euro Stoxx 50:     3% – 11%
  • MSCI EM:            7% – 12%