David Kostin, chief U.S. equity strategist at Goldman Sachs has bucked the bullish trend in the first few months of the year after having been bullish for a long time. Kostin vocally called for S&P 1,250 despite the persistent rally in the first 4 month of the year (see here). Kostin now says the S&P is likely to end the year down slightly at 1250 (4.2% lower than today). He broke his reasoning down based on three big trends:
1. Stagnating US economy.
2. Multiples are likely to stagnate
3. Earnings growth is slowing.
Kostin says the S&P is likely to earn $100 this year and that margins are likely to contract. I think his positioning is totally rational given my own outlook for earnings and the very low upside potential and substantial downside risks heading into the latter portion of the year (see here for more on that).
Kostin also outlined Goldman’s hedge fund monitor and the stocks most aggressively accumulated and most owned by hedge funds. Goldman’s hedge fund VIP basket recently added the following names:
Barrick Gold (ABX)
Capital One (COF)
Rock Tenn (RKT)
The names most DROPPED by hedge funds are:
The 5 names most owned by hedge funds are:
Express Scripts (ESRX)
You can see the full Kostin interview at CNBC.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.