November 13, 2018

Goldman's 'bear market risk indicator' signals returns will be zero the next 12 months

Goldman Sachs's bear market prediction tool is at an "elevated" level that has historically signaled a zero average return over the next 12 months and a "substantial" risk of drawdown.

Goldman's bear market indicator — which takes into account the unemployment rate, manufacturing data, core inflation, the term structure of the yield curve and stock valuation based on the Shiller PE ratio — is at a rare 73 percent, its highest level since the late 1960s and early 1970s.

The indicator is "flashing red," wrote Goldman chief global equity strategist Peter Oppenheimer. "Historically, when the Indicator rises above 60 percent it is a good signal to investors to turn cautious, or at the very least recognize that a correction followed by a rally is more likely to be followed by a bear market than when these indicators are low."

Read more at https://www.cnbc.com/2018/11/12/goldmans-bear-market-indicator-shows-zero-returns-over-next-year.html

No comments:

Post a Comment