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Goldman Forecasts 3% Growth For S&P 500 Over Next Decade: Expert Contradicts, Says It Has 'No Relationship' With Real Returns

Goldman Sachs has predicted a 3% annualized growth in the S&P 500 index over the next 10 years in a base case scenario, however, this expert warns that such a prediction highlights “no relationship” between the valuation metric price-to-earnings ratio and real returns.

What Happened: According to Goldman Sachs’s global strategy paper, the annualized 10-year returns for the S&P 500 stood at 13% for the period between 2014 to 2024. The distribution around this forecast ranges from -1% to +7%, with 3% being the baseline.

However, Seth Golden, the chief market strategist at Finom Group, has said “With this forecast, caveat being there is no relationship between P/E and real returns.”

This implies that he doesn’t think that high or low P/E ratios necessarily predict future real returns. Golden is challenging a fundamental assumption of Goldman’s model, suggesting that their forecast might be based on a potentially unreliable relationship.

Goldman Sachs"The days of fast and robust annual returns are over. S&P 500