Goldman Sachs warns: A 13% increase in the valuation of weighted stocks such as the S&P 500 may signal weak returns in the coming months

WendyCS

2024-04-02 03:51:00

Goldman Sachs said that heavyweights such as the S&P 500 are currently trading at a price 13% higher than the fair value estimate. In short, Goldman Sachs says stocks are overvalued, not just the Big Seven or tech stocks. The bank noted that high valuations usually lead to lower returns in the coming months, but this is not the case at this time. Goldman Sachs analysts say it usually takes four months for the average weight index valuation to peak after it exceeds the 10% overvaluation threshold (the index surpassed that level in February). Overvaluation persists for 10 months and eases as earnings improve, but slowing growth is the most obvious catalyst amid a sell-off in the index.

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