Goldman Sachs says it is usually profitable to buy after a 5% drop in the S&P 500 index
Goldman Sachs strategists have stated that over the past 40 years, buying after a 5% drop in the S&P 500 Index has usually been profitable, with a median return of 6%. They believe that the U.S. stock market has not yet priced in expectations of an economic downturn, and that while large-cap tech stocks have seen a decline in valuations, they still reflect optimism about artificial intelligence. They expect that the adjustment is not yet over, but a bear market can be avoided. This is investment research information related to buying after a stock market decline
Goldman Sachs strategists say that over the past 40 years, buying after a 5% drop in the S&P 500 index has usually been profitable.
A team led by David Kostin stated that since 1980, buying the index at a price 5% below recent highs has resulted in a median return of 6% over the next three months.
In their report on August 5th, they wrote that the index has delivered positive returns in 84% of cases.
In most instances, a 10% pullback is also an attractive buying opportunity, but the rebound after such a magnitude of decline is weaker compared to a 5% drop.
Strategists noted that cyclical stocks have underperformed, but the U.S. stock market does not seem to be pricing in expectations of an economic recession.
While valuations of large-cap tech stocks have come down, they continue to reflect optimism around artificial intelligence.
Strategist Peter Oppenheimer stated in another report, "We do not believe the adjustment is over, but we continue to expect to avoid a bear market."
