Goldman: 5 Strategies for a 2013 Stock Market Rally

David Kostin, Chief Equity Strategist at Goldman Sachs is very bullish about 2013.  He’s calling for a 10%+ rally in stocks.  Kostin had been bearish for much of the latter portion of 2012 with a 1250 price target on the S&P 500.  His current call is largely based on valuations which could change rapidly if corporate profits take a turn for the worse (via Business Insider):

“Valuation: 12-month target of 1575 reflects 12% potential return
Our 3-month, 6-month, and 12-month forecasts are 1450, 1500, and 1575. We use six valuation approaches including DDM, uncertainty-based P/E multiple, cyclically-adjusted P/E multiple, price/book and ROE relationship.

Kostin recommends positioning for the multiple expansion using the following strategies:

…Strategies to capture growth: market, sectors, stocks
(1) Stocks will outperform Treasuries;
(2) Equities will beat credit returns, although not on a risk-adjusted basis;
(3) Cyclical sectors will beat defensive sectors (Materials, Industrials, Information Technology will outperform Consumer Staples, Telecom, and Health Care);
(4) Double Sharpe Ratio stocks offer both high risk-adjusted earnings growth and prospective returns; and
(5) Stocks with high BRICs sales exposure will beat domestic-facing firms.”

Source: Goldman Sachs

-------------------------------------------------------------------------------------------------------------------

Got a comment or question about this post? Feel free to use the Ask Cullen section, leave a comment in the forum or send me a message on Twitter.

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

More Posts - Website

Follow Me:
TwitterLinkedIn

  • http://www.conventionalwisdumb.com Conventional Wisdumb

    So what happened to his yr end 1250 target?

    Is this a never mind, nothing to see here moment?

    Meanwhile anyone following his prior call would have been poed by now. Is it any wonder that a cynical person like me remains so cynical.

  • http://exertia.wordpress.com exertia

    +1

  • Anon

    Ahh yes its that time of year again. I really don’t envy these guys in having to come up with some coherent argument as to why next year will be pretty good and their clients should call up their brokers to discuss the wonderful opportunities.

    I guess if you call for 10%+ for every year you will get it right quite a bit. Personally, I just don’t see the value in any such analysis…

  • Jason

    Ad nauseam on this! The only reason for rubbish articles like these are that it is how these miserable pundits make a living. It’s that plain and simple. Most all of these sorts should be packing ice cream sugar cones in the middle of the night.

  • http://www.sharemarketszone.com market zone

    when start rally from 2013?

  • Cowpoke

    Rally don’t start 2013.. rally done peter out.. sorry