Keep on truckin’: Will the US continue to outperform other markets?
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After another stellar year for US equities, how should investors position themselves for 2025? I'm Alison Nathan and this is Goldman Sachs Exchanges. Today, I have the pleasure of sitting down once again with Charmaine Mosavarramani. Charmaine is the chief investment officer of Goldman Sachs Wealth Management and the head of the investment strategy group. Charmaine and her team recently published their 17th annual outlook in which they share their investment themes and recommendations for clients. Charmaine, welcome back to exchanges.
Thank you very much, Allison. And until you said 17th, it hadn't registered that there were that many of them, but, yep, quite a few. Time
flies. So let's start at the beginning as I always like to do and talk first about the cover of your piece and the title in particular, which I know you and your team put tremendous thought in. I say this every year, but it every year, it's very true. This year's piece is entitled Keep on Truckin'. So talk to us about why you chose this title. As
you know, and hopefully many of your listeners already know, US preeminence has been one of our key investment themes. So we're always trying to convey the message that that investment theme is still valid. Maybe at some point, it won't be, but we can't foresee any such change. So, again, here, when we say keep on trucking and we have a big image of something very US oriented, we're trying to convey the message that US preeminence is intact. And in fact, the US keeps on trucking ahead of everybody else. And the distance between the US and these other countries just continues to get longer and
Absolutely. You could not have been more right on that theme that we discussed quite comprehensively last year at this time, but even in prior years. But 2024 was certainly a year of US dominance. But we now had yet another year of phenomenal US stock performance. And valuations really by most measures are very, very stretched. So even if you believe that companies in the US are going to continue to outperform, is that already fully priced in? That's
an excellent question that a lot of our clients are asking. So on the US side, clients are saying, given how well the US has done, shouldn't we actually continue to be just invested in US equities? And why do we even have any other assets outside of US equities, whether it's public or private, but just the concept of non US developed equities or emerging market equities? And the non US clients are saying, given how expensive US equities are, why not tactically shift towards non US equities? And our view is that while equities are expensive, when we actually look at valuations in this environme
Interesting. So where does that leave you, that valuation perspective and your earnings expectations leave you for returns for US equities in 2025?
So when we look at the returns for US equities and look at returns outside the US, basically, we're talking about returns somewhere depending on the country between 7, 8, 9%. So for the US, our base case is an 8% return. This compares to a 6% from last year, but we don't want clients to think we're actually more bullish because this 8% would have been a lower number if we didn't have the downdraft we had over the last several weeks of 2024. So in fact, the number is a tad higher only because we had that big downdraft. So our base case returns are somewhat similar. And then in terms of our upsi
But just to put that in perspective, that's down from high double digit returns in 2024. Yes.
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