This page has been archived and commenting is disabled.
Goldman Activates The Magic 8 Ball, Can Now See The S&P 500 In 2015 (At 1900)
Just because Goldman's track record at predicting the near-future is so fantastic (Abby Joseph Cohen "forecasting" in March 2008 the S&P would close the year at 1500, or about 40% off), the firm that spawned a thousand central bankers and ambassadors, has decided to try its hand at really long-term stock predictions. As in "three years over the horizon" long. And, of course, it's only uphill from here.
To wit: "We develop a new framework for forecasting equity returns over the medium term using a consistent approach globally. We extend our forecast horizon to the end of 2015."
Perhaps the framework consists of the following: If print (globally), then buy? Since the presence of a liquidity tsunami is the only variable that matters in a world whose fungible G-8 stock market has been reduced to a playground for central planners desperate to return confidence to a casino so rigged retail investors just can't wait to leave regardless of the "promised" risk-free upside, and no longer even pretends to reflect reality, fundamentals, or discounting the future, the following sentence makes perfect sense:
We forecast strong returns, mainly driven by earnings growth, in all four regions we consider. We expect the best annualized total return in Asia ex-Japan (21%), followed by Europe (19%), Japan (15%), and finally the US (9%). These returns fall between the 50th and the 87th percentile of the distribution of US historical returns."
And, of course, this:
With a 2015 horizon all regions look attractive on an absolute basis
Brilliant. And in 2008, when crude was at $140 and about to go to $30, Goldman recommended buying every barrel available.
For those eager and curious for more details about this Oracular profundity, we provide:
We expect strong equity returns globally over the next 3 years. In this report we develop our framework for forecasting equity returns over the medium term and extend our forecast horizon to the end of 2015. Our framework uses the medium term economic forecasts launched by our economists in their 2013 outlook pieces, and outlines a larger part of the path towards the strong 5-10 year equity return potential that we have highlighted in several past reports. We provide these forecasts for the four major regions that we cover and compare the return potential across these regions, which have so far had very different recoveries from the financial crisis. We forecast annualized returns ranging from 9% for the US to 21% for Asia ex-Japan. Exhibit 1 shows that this corresponds to returns between the 50th and the 87th percentile when adjusted for inflation and compared to the historical distribution of annualized 3 year real total US returns.
We see medium term return forecasts as particularly important in the current environment. Given the depth of the financial crisis, normalization will take a long time, and it is therefore important to map out the path towards recovery over the medium term. Also with bond yields at extreme levels, and the drawdown risk in equities still high, we see intermediate term equity forecasts as a good way to quantify the potential medium term costs of the near term safety of being in bonds rather than equities.
Our returns are mainly driven by earnings growth. The paths that we expect for prices and earnings are shown in Exhibits 2 and 3. We expect annualized earnings growth ranging from 8% in the US to 21% in Japan. The strong earnings growth outside the US reflects a rebound from cyclically weak margins. We forecast P/E multiples to fall 1% annualized in Japan and rise elsewhere between 1% in the US and 4% in Asia ex-Japan.
We model earnings growth and discount rates using historical relationships between these variables and the macroeconomic environment. We then feed these variables through our regional dividend discount models to generate our price targets in this central scenario. The targets are more model-driven than our usual 3, 6 and 12 months targets, as discretionary deviations from our models are more relevant over shorter horizons, where we have more visibility on specific risks and opportunities that are not fully captured by our framework.
The obligatory pretty charts and tables:
There is, of course, a caveat. Namely, "we may be wrong about everything if things don't quite turn out as the central bankers want them to"
A disappointing economic recovery would be the main risk to our forecasts. Our forecasts are based on our economists’ forecasts of global growth accelerating from 3.0% in 2012 to 3.3% in 2013 and further to an above 4% pace from 2014 through 2016. Our alternative scenarios suggest that widely held concerns about margins and valuations not being truly cheap can be addressed without destroying the case for equities. However we judge markets to be roughly fairly priced for the current economic environment and therefore returns are unlikely to materialize on a sustained basis unless the economic recovery continues. Our discussion of risks focuses on the downside as the returns in our central scenario are already very attractive. However, there are clearly also upside risks, with a stronger economic recovery than we forecast being the most obvious.
Finally, like most of our readers, we wondered about one thing: why only 2015? Why not pull an IMF and predict where the S&P will be in 2022? Now that would be truly boss.
»
- 13160 reads
- Printer-friendly version
- Send to friend
- advertisements -
LTCM was pretty good at predicting too. (for a while)
Next FOMC minutes leak to talk about replacing QE with Chuck Norris. That ought to bring confidence into the market.
Based upon the proprietary ZeroHedge Predictive Modeling System (PMS), using data mining technology to understand the relationship between inputs and outputs, our detection theory generated model has included and evaluated all the variables impacting our future scenario.
We therefore conclude, using our new framework for forecasting, that Goldman Sachs will cease to exist as an ongoing corporate entity by July 2015.
Hedge accordingly-Bitchez
All regions look promising.
Meaning I'm gonna have to get my back waxed again?
Damnit!
GS is just part of the money trap. They shape their own destiny through control.
Must see: How the Banks Control the World Through Debt
http://www.planbeconomics.com/2013/03/bbc-documentary-money-trap-how-ban...
'the firm ..., has decided to try its hand at really long-term stock predictions.'
They're obviously using a different dart and a bigger sized board...
+1
Nice reference.
Goldman should reshake because the 8-ball should answer:
Reply hazy, try again
Of course...Abby Joseph Cohen. There is a name not heard so much these [ exuberant ] days.
When not making wholly erroneous S&P predictions, Abby Joe was/is a member of Obama's Innovation Advisory Board.
re:
s/ Have you ever seen a Muslim surround himself with so many Jews? It's mind boggling. /s
LOL
Usually it's the Jews being surrounded by a whole buncha Muslims, Middle Eastern style
Well, somebodys gotta sell them the goat porn
She/he/it was on Bloomberg Surveillance a couple of weeks ago and if you saw me shaking my head and reaching for the dial to change the station on the PA turnpike that was why. It was like the dog farted in the car it was so bad. What crap and shame on the Bloomsters for not calling Abbey Joe out.
Attn muppets:
Time to go in, all in, full tilt.
Fucking retarded, thank god for this site.
The terrifying possibility is not that Goldman is wrong.
The terrifying possibility is that Goldman is right.
You are doubting we are entering a new age of prosperity?
Soon poverty will be something from the past! Barbaric dark times.
Ben Shalom is the hero and the printing presses are the new foundation of prosperity!
haha, I had to +1 your comment, but it needed the +23 button. :-D
I just woke up and saw red on the S&P am I dreaming LOL. This market cannot go down.
There is a UPWARDS channel on the daily S&P that is quite strong => http://bit.ly/12OOs6A
I think there are 3 things at play.
1) Too many people go bearish.
2) Funds being pumped into asian markets needed to go somewhere? SO dumped into our US markets, instead of the emerging markets.
3) many people are saying "do not fight the fed" as ben bernanke now has a hobby of PRINT....PRINT....PRINT LOL.
We be interesting to see what happens next week and when the big bank report on FRIDAY.
So was Elaine Garzarelli.
Once.
[Paid for all of her subsequent facelifts.]
Obviously one tentacle doesn't know what the others are doing.
NOW the top is in.
Only when Abby j goes on cnbc
And there was that good looking lesbian chick who was a permabull, too. Oh, fond days of BTFD.
Wait.....
Do they work for brokerage firms?
In case you were wondering what that loud clanging sound was, it was your "friends" at Goldman ringing the fucking bell indicating the top of this market....
Goldman Translator:
SELL, SELL, SELL !!!!!!!!
Exactly, this was a giant GS "buy" rating on the market.
Sell the shit out of this thing.
Sure, if you own it, sell it; but shorting this market is like playing Russian roulette with one chamber empty.
This is old news anyway. Only yesterday Tyler predicted 1900 BY THE END OF THIS YEAR:
http://www.zerohedge.com/news/2013-04-10/bernanke-kuroda-capital-llc-ove...
Worse is with one in the pipe of a service auto...
The dotted line chart porn is freaking hilarious.
Hoes on my tip for the title I'm holding
Eazy-E's fucked up and got the 8 ball rolling
Sucka on me cause the title I'm holding
Eazy-E's fucked up and got the 8 Ball rolling
Punk got dropped cause the title I'm holding
Eazy-E's fucked up and got the 8 ball rolling
Make a toast all you punks to the title I'm holding
Eazy-E's fucked up and got the 8 ball rolling
*cough* BULLSHIT!
Remember, do as they do not as they say. Gods work my friends.
Works without Goldman is dead.
A Goldman Oldie...
Like this old joke...
I've got a stock here that could really Excel!
This is madness, I can't take anymore. Good Bye!
Here-> http://charlesbivona.tumblr.com/image/12626302875
More cocaine needed ASAP for CNBC and BLOOMBERG TV members, Analysts and
Chartists already fully supplied, thank you for your cooperation. :)
Postscript #2: **2013 returns are computed from current price
So at least you know they've dumped everything as of today.
My 2015 forecast: Goldman Sachs will be pronounced 'GOLD-man SUCKS', and a 3-YR CD will handily outperform their recommendations.
I always thought it was gold man sacks
"gold man sacks" That could make it quite adventurous getting through airport security.
Goldman's got it all wrong; the S@P is going to 2000+ this year as all US stock markets double in nominal value, ala 1999 style. THEN comes the big blow up and S@P 666, 400 or however low it will go in the absolute carnage!
I'm not at all unconvinced that everyday's close between now and then hasn't been pre programmed
All the analysis/earnings bullshit that GS provides is not only crap, but irrelevant. The marjet WILL go to 1900 (minimum I believe...2200 to 3000 is more likely), because of money printing...that is the alpha and the omega of the argument. There is a clusterfuck, a Fukushima, a FUBAR, a circle jerk of massive proportions occurring. A company's sales will go up and up because the government will increase entitlements (social welfare, food stamps). How to fund this 'largesse'?...debt issuance. But who will buy the bonds?...ah, the Primary Dealers. And who will they sell them too?...ah, the Fed. And how does the Fed pay for all these trillions of purchases? Prints money and credits the Primary Dealers> and what do they do...INVEST IN STOCKS. This circle jerk can go on until people realise that the emporer has no clothes, the mighty dollar is shit paper. How long will that take...a decade to a generation. Meantime, NEVER short stocks, or if you do, take any profit early . BTFD. This has got a LONG way to go.
Abby is comically bad. I've watched Abby ride right over the top of 2 bubbles beating a mega bullish drum. She is always bullish. After the crash, you don't hear from her for years. No apologies, no flowers, no sweet nothings. She fucks you, and she is gone.
So she's really a guy?
Now that's a disturbing mental image I'll have to carry around today. Yech.
They exist to sling product to Muppets. Not to be accurate forcasters.
Looks like 1900 by EOY.
Can they also tell us which 40 of the next 800 days the S&P will go up 0.5% to get to their prediction?
That’s how the index moves now, and obviously we can never have another down day.
HORSESHIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIITTTTTTTTTTTTTTTTTTTTTTTTTT
And, in the end, the value of the stock market means nothing to general prosperity.
Reference: 17th century Holland --tulip bulbs.
bubble...wait for it....wait for it.....POP
@ downtoolong...that is very amusing mate...thanks for the laugh.
...and in addition to my comment above: buying productive land and 'things' (pref gold) will be better than stocks ultimately (although it wont look like it for a long time as nominal stock prices soar and gold prices languishes thru manipulation.) But come the day, the day when the SHTF and the people shout "the emperor has no clothes", 'things' will be priceless.
The good news?...despite the impending doom and gloom around the place, there is still years of paradigm that needs shifting (eg the omnipotence of the Fed, the value of cash etc). But start now; TPTB have got a minimum of 4 years on (most of) you/us.
lol
In 2015 I forcast the National Debt to be 27Trillion - thanks to the U.S National Debt Clock.
Better off buying the 3:30 pm Ramp Capital LP than buying and holding to the GS ES target price for 2015.
http://www.zerohedge.com/news/2013-04-08/invest-330-pm-ramp-capital-lp-2...
It doesn't matter what the squid see's the markets at. The F/X, bond, credit markets...ect, have decoupled from the equity markets. Most of the trades I'm making now are based more on central banking, and sovereign issues. The markets aren't reacting to macro financial reports/news, and are completly manipulated.
Most of my trades are only being held for a few hours max. I won't hold a fucking order overnight in this crash n smash derby. I have no confidence swing trading. I find my levels and trade to them. Rinse and repeat.
If the Squid is saying buy, the Squid is selling to the muppets.
Ya, and that's what's most scary - the Squid is saying buy EVERYTHING.
Ahoy, thar be giant clouds of squid ink in ye olde drinke!
Steer clear mateys, steer clear.
Was this forcast leaked to them by the Fed?
Caveat muppet
Just STFU and buy some STAWKX SPX 2000 !!
I call bullshit.