It’s been a shaky year so far for the stock market. A huge drop to start the year was followed by a monumental comeback, and now the market appears to have settled into a relatively stable, albeit uninspiring range. A market sell-off between 5% and 10% should be coming soon, according to Goldman Sachs US Equity Strategist David Kostin. A mix of factors currently building up in the market, along with the market’s recent history of pullbacks, should end with a drop in the next three months. “Although investors appear complacent in the wake of Brexit, a maturing economic cycle with elevated valuations, decelerating buybacks, and growing political uncertainty provide the basis for potential market weakness in the second half,” Kostin wrote. There’s a lot to break down there, but here’s a quick refresher of Kostin’s concerns: Valuations for stocks are well above their long-run averages, making them expensive. The 12-month forward price-to-earnings of the S&P 500 is 16.4x, whereas the average over the past 10 years is 14.3x. This increased valuation even drew the attention of the Federal Reserve. Buybacks have been a massive source of support for stocks – in fact, the only net source of demand. For… Read full this story
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GOLDMAN: Get ready for another stock market dive have 288 words, post on www.businessinsider.sg at July 6, 2016. This is cached page on CHUTEU. If you want remove this page, please contact us.