Parece que el optimismo no termina de llegar... Sera dificil que terminemos el año con sustos...
“Is an equity correction imminent?”
Goldman Sachs’ top stock market analyst David Kostin says that’s the question everyone is asking.
“Clients keep asking about an impending equity downturn,” he wrote in a new research note. “Reasons cited include the 8-year bull market and economic expansion, high valuation, low volatility, Fed tightening, and politics.”
Ironically, awareness of this long list of worries may actually be making the market less vulnerable to a major sell-off — as it inhibits reckless buying. This brings us to the two key reasons why a market correction remains at bay.
Markets are not euphoric
“First, investors are not complacent,” Kostin said. “In Sir John Templeton’s timeless observation, ‘Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.’ Investors today are situated between skepticism and optimism.”
And this is not just based on the soft data coming from sentiment surveys. The hard data reflects conservative positioning.
“Few are euphoric as 27% of core managers are beating their benchmark,” Kostin added. “‘Tormented bulls’ best describes investor mentality. Alpha-seekers have normal cash positions (3.2% of mutual fund assets), active manager redemptions are offset by beta inflows (ETFs), and corporates continue to repurchase shares.”
Speaking of hard data, the fundamentals underlying the economy remain quite strong, despite all of the worries out there. This is the second reason why Goldman Sachs isn’t worried about a market correction.