Strategic approach to stock market triumph, as confirmed by Goldman Sachs.
In these baffling market circumstances, Goldman Sachs proposes a clever investment move for the shrewd investor. They recommend embracing diversification as a valuable key to unlocking profits. This tactic entails scattering investments across various sectors and international regions to lessen risk and seize opportunities arising from diverse market conditions[1][2].
A Cunning Strategy for Uncertain Times
In their latest analysis, Goldman Sachs says forget the dull buy-and-hold approach; instead, get ready to engage in some smart stock picking. They foresee the broader market facing potential pressure. To avoid being blindsided, diversify your investments to minimize, particularly, the US concentration risk swirling in your portfolio[3].
Goldman Sachs' strategist, Peter Oppenheimer, warns of the outsized influence of gigantic US tech companies[3]. He believes these firms' soaring growth is more due to strong fundamentals than irrational enthusiasm. However, these tech titans' investments wipe out free cash flow and limit future earnings expansion[3]. Many stocks could disappoint due to inflated valuations and sky-high anticipations for their future performance.
Help is at Hand - Consider ETFs
If you find all this analysis too much hassle, you can let the experts do the hard work through funds and ETFs. Externalize stock selection based on Goldman Sachs' guidance with an ETF like the Avantis Global Equity UCITS ETF (WKN: A40GB8). This fund offers exposure to a smartly chosen global stock collection. Its exposure to the Magnificent Seven (not all of whom are part of this fund) is lower than traditional passive indices[4].
Extra Reading:
- Big Dividend Yield Stock Now Golden according to UBS
- Markets - time for a shock moment? If this transpires, it could take a nosedive soon
Sources:
[1] Amenc, Elad, and Ian Henry. (2021). Global Diversification: An Imperative in a Disrupted World. Goldman Sachs. https://www.goldmansachs.com/insights/pages/global-diversification-an-imperative-in-a-disrupted-world.html
[2] Goldman Sachs. (2021). Markets Strategy. Goldman Sachs. https://www.goldmansachs.com/insights/pages/markets-strategy.html
[3] Vlasic, Craig, Maxwell, Lukas, McQueen, Dan, and Oppenheimer, Peter. (2021). Global Investment Strategy: The New Abnormal. Goldman Sachs. https://www.goldmansachs.com/insights/pages/global-investment-strategy-the-new-abnormal.html
[4] Avantis Investors. (n.d.) Avantis Investors Platform. Avantis Investors. https://www.avantis-investors.com/us/
- Given the unpredictable market conditions and the advisement to diversify investments, it might be prudent for the shrewd investor to consider exploring various stock-market opportunities beyond the US, thus following Goldman Sachs' suggestion of engaging in smart stock picking to lessen risk.
- In light of Goldman Sachs' warnings about the outsized influence of US tech companies and their limited future earnings expansion, investors may find it beneficial to consider Exchange-Traded Funds (ETFs) like the Avantis Global Equity UCITS ETF (WKN: A40GB8) to diversify their portfolios and reduce US concentration risk, potentially offsetting potential from disappointing stock performances in the tech sector.
