Pragmatic Capitalism

Practical Views on Money, Finance & Life


David Kostin, Goldman’s Chief US Equity Strategy has been pretty bullish in recent years and despite some bumps in the road he’s been right.  But the strategist is singing a bit of a different tune these days.  He’s growing increasingly concerned about some negative trends that could send the S&P 500 below 1,250 (via Business Insider):

“Kostin said there were three main reasons for his call:

  1. The U.S. economy is stagnating, growing below trend.
  2. In a weak economic growth environment, markets historically have a flat multiple
  3. 2012 is expected to see earnings growth of only 3 percent.”

The risk is likely skewed to the downside here as well. Since profits have been largely driven by the budget deficit in recent years and the risk of spending cuts looms we could very well see austerity lead to substantial profit declines.

See the full Kostin interview here:

Source: Bloomberg


Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC.Orcam is a financial services firm offering asset management, private advisory, institutional consulting and educational services.He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.
Cullen Roche

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