"The biggest takeaway from Goldman Sachs' 2026 investment forecast, at least in my view, has to be that a more active approach might be more worth considering over a passive one, especially if you subscribe to the belief that the S&P 500 is destined for 6.5% in annual returns over the next decade, which is quite modest, even disappointing, given many investors might have the expectation for a long-term average gain closer to 10%."
"Of course, higher valuations and hotter returns in the past three years mean that it'll take more from companies to keep up the blistering pace. Either way, with the S&P fresh off a 16% gain, many investors might be a bit worried that we might be overdue for a year in the red. Undoubtedly, if 2026 were to be a down year, one has to think it'd be the AI trade that's to blame."
"2026 could be another solid year for stocks, as the economy keeps rolling While the long-term (think the decade ahead) return forecast might be more muted, Goldman Sachs still sees 2026 as a good year for American stocks, with a target of 7,600 for the S&P 500. Whether 2026 is the last big up year for markets before things get flatter or more choppier remains the big question."
A long-term forecast places S&P 500 annual returns near 6.5% over the next decade, which is modest versus historical expectations near 10%. Recent higher valuations and strong gains over the past three years mean companies must deliver more growth to sustain returns. A 2026 target of 7,600 for the S&P 500 implies roughly an 11% gain for the year, though a prior 16% gain raises concerns about a possible pullback. The AI-driven rally is a concentrated driver of recent performance and could increase downside risk. Active stock selection, non-U.S. exposure, and mid- and small-cap allocations offer alternative opportunities to passive broad-market positions.
Read at 24/7 Wall St.
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