Goldman Sachs’ Peter Oppenheimer, one of the investment world’s most-watched strategists, has sent a powerful message to investors: U.S. stocks are set to underperform over the next decade, and virtually every other region should return more. This forecast marks a sharp turn from the dominance American equities have shown in the last generation and is set to reshape global portfolio strategy for years to come.
In a Global Strategy Paper dated Nov. 12, analysts on Oppenheimer’s team noted current global valuations are high, with the 12-month forward price-to-earnings (P/E) multiple for the MSCI AC World index sitting around 19x. However, the U.S. market has a particularly high starting P/E of approximately 23x. The baseline forecast for the U.S. assumes a 1% annual decline in valuations over the decade, with downside risk seeing a 3% annual drop.
