“With all the uncertainty out there about theFederal Reserve, fiscal policy, Europeand North Korea, one would think it’s hard enough to give an equity forecast for the end of this year. But the gang at Goldman is taking a stab at predicting market returnsuntil 2016.
The global equity team at the elite Wall Street firm sees 9 percent annual total returns for the S&P 500 ahead, pushing the index up 20 percent to 1900 by the end of 2015. They see even bigger returns for Japan, Europe and the rest of Asia.
Gains will be “driven by strong earnings growth supplemented by a good dividend yield and some expansion in multiples,” states the strategy paper. The forecasts rely “upon our economists’ scenario for future economic activity and the tools for modeling earnings and discount rates that have so far been important inputs for setting our 12-month index targets.” (Read More: You Must Understand This About Yield)
The firm sees 21 percent annual returns in the Asia ex-Japan region over the next three years, followed by 19 percent a year in Europe and 15 percent annual gains in Japan….”