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Goldman Sachs 2013 OUTLOOK

Goldman Sachs 2013 OUTLOOK



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Investment Strategy Group
Investment Strategy Group

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Categories:Types, Research
Published by: STEFAN MEDO VLAHOVICH on Mar 13, 2013
Copyright:Attribution Non-commercial


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In search of investment peaks in a low-return environment.
Investment Management Division
Investment Strategy Group
 January 2013
Over the Horizon
This material represents the views of the Investment Strategy Group inthe Investment Management Division of Goldman Sachs. It is not a productof Goldman Sachs Global Investment Research. The views and opinionsexpressed herein may differ from those expressed by other groups ofGoldman Sachs.
Sharmin Mossavar-Rahmani
Chief Investment OfficerInvestment Strategy GroupGoldman Sachs
Brett Nelson
Managing DirectorInvestment Strategy GroupGoldman SachsAdditional Contributorsfrom the InvestmentStrategy Group:
Neeti Bhalla
Managing Director
Matthew Weir
Managing Director
Maziar Minovi
Managing Director
Benoit Mercereau
Managing Director
Jiming Ha
Managing Director
Sylvio Castro
Managing Director
Farshid Asl
Managing Director
Investment Strategy Group
over the last four years,
we have been making the casethat US preeminence relative to other economies is the singlemost important factor underlying our core allocation toUS assets. As we began thinking about our
2013 Outlook
,we decided to revisit that call in light of the remarkableperformance of US assets since the trough of the financial crisisin early 2009. The question now is: have the factors that ledto this performance changed?
The short answer is: yes, but for the better. USpreeminence is not only still intact, it rests on astronger foundation and is likely to be sustainedfor the foreseeable future. The past four yearshelped crystallize awareness of the key economic,institutional, human capital and geopoliticaladvantages the US enjoys over other economies.Meanwhile, persistent structural fault lines haveput key developed and emerging market countriesat a further disadvantage to the US.Of course, the US faces its own fault line: itsstill-problematic fiscal profile. In this report, weevaluate the likelihood of a resolution.We also affirm that there are intriguinginvestment opportunities outside the US. Fault linesin other countries are not fatal flaws. We pointthem out so that investors are aware of them, andcan use them to allocate assets on a prudent andselective basis.Importantly, we encourage investors tolower their return expectations across all assetclasses over the next several years. We have, forthe first time in our
series, issued ourreturn expectations for major asset classes forthe next five years. It is our hope that comparingexpected returns for these assets over the shortand intermediate term will help our clients betterbalance their return objectives with their risktolerances and investment horizons.

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