Goldman Sachs is probably wrong about stocks
🔸 Plus: The correlation between playing video games and physical attractiveness 🔸 Getting your money back if your train is late 🔸 EasyJet has launched EasyBet, for gambling 🔸
Your 2-minute guide to demystifying money and making you richer
The markets, year-to-date
S&P 500: 5,833.20 ⬆️ 22.99%
FTSE 100: 8,279.70 ⬆️ 7.23%
Bitcoin: $68,632.26 ⬆️ 55.26%
GBP to USD: $1.2992 ⬆️ 2.08%
GBP to EUR: €1.2006 ⬆️ 4.12%
(As of Monday at 1500)
Is Goldman Sachs wrong about stocks?
Goldman Sachs put out a research note recently that got a lot of headlines because of how gloomy it was. Over the next decade, the Goldman analyst predicted, annual growth in the stock market would be only about 3% per year.
That was a shock because, historically, annual growth for the S&P 500 is in the range of 6% to 10% per year, depending on the timeframe. Over the most recent decade the annual average return was 13%.
That's one of the reasons Moneyin2 encourages you to invest your savings in an S&P 500 index tracking fund, so you get the benefit of those returns.
Goldman’s argument is that the most recent 10-year period has been exceptional, and that most of the growth in stocks has been concentrated in relatively few companies — the “Magnificent 7” tech stocks. That growth cannot continue forever. There will be a reversion to the mean, eventually.
Let’s go to the charts …
Yet Goldman is probably wrong about this, if history is a guide. Since 1930, stocks have returned 3% or less per year over a decade only 9% of the time, according to investment advisor Ben Carlson, who crunched the numbers.
That would imply there is a 91% chance that you’ll get more than 3% over any time period — assuming the future looks something like the last 100 years.
The average decade-long return since 1930 is 11%. If you look at this chart, it shows that the vast majority of decade-long time periods have returns of 8% or more. In fact, the chances of getting a juicy 15% over 10 years is nearly 10%:
Predictions are usually wrong
No one can predict where the market will be 10 years from now. In fact, some professionals have given up trying to forecast where the S&P 500 will be even one year from now because its short-term performance is so unpredictable.
This chart shows how much volatility there is, by year:
Those spikes look scary, even if most of them are upward spikes. But volatility is not the same as risk. Yes, the S&P goes up and down. But it has a very obvious long-term upward trend. Over the last 90 years, it looks like this:
In other words, if you’re serious about investing your savings and reaching financial independence, focus on the long-run.
This is why Moneyin2 exists, to show you the ropes! The Moneyin2 Guide to Wealth is a good place to start.
The Moneyin2 Guide to Wealth
The Moneyin2 Guide to Wealth will get you the biggest return on your savings by maximising cash matches from your employer, free cash from the government, and shielding your investment gains from tax. It takes you step-by-step through the world of pensions, SIPPs, ISAs and ETFs — all in plain English.
And for dessert …
As Trump’s chances of winning the election got stronger, the US dollar went up against other currencies. That’s because a Trump Administration is predicted to increase inflation in the US, forcing the Fed to keep interest rates higher, driving up demand for the dollar.
Microsoft CEO Satya Nadella asked for a reduction in his pay because of holes in the cyber security of his products, so the board gave him a massive pay rise instead.
There is a correlation between how much time you spend playing video games and how ugly you are.
Don’t forget to get your money back if your train is late. Repayments start when your train is delayed by as little as 15 minutes — but most people never claim!
EasyJet is launching a gambling business. It’s called EasyBet. (Gambling is for losers, BTW.)
More from Moneyin2:
Do you want Moneyin2 to recommend your Substack?
Get in touch at contact@moneyin2.com!
We want to hear from you!
What money issues do you want us to tackle in this newsletter? Let us know at contact@moneyin2.com.
Follow us on social media
Facebook, TikTok, Instagram, Twitter, and Threads.
Partner with us!
If you want to sponsor Moneyin2 get in contact here.