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Goldman Analysts Are Bearish on the S&P 500 – Could This Tech ETF That Is Outperforming It Be A Better Idea?

Updated: 28-10-2024, 03.03 PM

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The S&P 500 has been one of the investment sector’s most reliable performers for almost 70 years. The index’s public filings show an average annual return in the 10% range since 1957. Despite that strong history, Goldman Sachs analysts believe the S&P 500’s returns will trend dramatically downward over the next decade. Fortunately, investors looking to diversify can consider an ETF that has outperformed the S&P 500.

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Averaging double-digit gains for 67 years is no easy task and an index that pays so well for so long will inevitably have a stretch where it performs sub-optimally. Goldman analysts believe that time has come for the S&P 500. They recently released a report predicting the S&P 500 will produce returns in the 3% range for the next decade.

If Goldman’s prediction is correct, one of the world’s most respected indexes could pay off at 70% less than its historical average. Goldman’s Chief U.S. Equity Strategist, David Kostin, released the bearish estimate, basing it on input from several of his firm’s analysts, who forecast S&P 500 returns between a low of 1% and a high of 7% between now and 2034.

It’s worth noting that Goldman’s 3% prediction is decidedly bearish and other analysts predict returns closer to 6%. However, even that forecast would be a marked reversal from the index’s 13% average over the last decade. Goldman’s report said, “This range roughly corresponds with a 95% confidence band around our estimate and reflects the uncertainty inherent in forecasting the future.”

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Goldman hasn’t lost all its faith in the index, but many analysts agree that the S&P’s historic growth rate and performance will be difficult to sustain. This leaves investors looking for a diversified passive income stream in a bit of a quandary. After all, most people don’t have the time or expertise to put together a stock portfolio that averages a double-digit annual return.

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