Goldman Sachs CEO David Solomon says he expects lower returns on equities over the next few years

Follow Goldman Sachs CEO David Solomon.

Stocks are on track to post three-year straight double-digit returns, as measured by the S&P 500, thanks in part to especially support from the Federal Reserve and other central banks at the start pandemic caused by corona virus. That boom has spread to other assets, including real estate, art, and cryptocurrencies.

“We expect that we won’t see the rates of return on stocks and many other assets over the next few years that we’ve seen over the last few years,” Solomon said Tuesday in response to a question from Joe Kernen on CNBC’s “Box of Squaw. “

“I do not believe that double-digit equity in perpetual compounding is something you should expect as an investor,” says Solomon. “I’ve been on a number of investment committees and charities, college boards, etc and certainly my mindset is that the returns we’ve gotten over the last three to five years are different from what we’ve been seeing. should expect as we go ahead.”

Solomon, who leads one of the world’s leading global investment banks, was asked to weigh in on a range of topics from inflation to bitcoin, China and the back office work.

While banks have bounced back from concerns last year that the pandemic will dent revenue, Solomon said he still feels Goldman’s stock is relatively undervalued. Shares of Goldman are up about 48% this year, but Solomon said the industry has been hit by the perception that bank earnings are more volatile than they are now.

“Like any other CEO, you know, I think the company and my stock are undervalued and undervalued,” Solomon said. “I think the earnings strength of the traditional financial services sector is pretty strong, and we get very, very low multiples from those earnings.”

As for the valuation of fintech rivals, Solomon said it’s a “mixed bag” where the winners are priced right, and the others are eventually acquired or closed.

Solomon said that while he personally doesn’t own bitcoin or ethereum, he wants to allow customers to speculate on it if they want to.

Of greater importance to Goldman than cryptocurrencies, he said, is the larger transition to providing financial services through digital channels. The company’s retail and corporate banking efforts under Solomon have focused on clean efforts to break into new business areas for investment banking, including going public. provide cloud for Wall Street firms.

“I strongly believe in the ongoing digitization and the disruption that is happening in the way financial services are delivered,” said Solomon. “It’s a big change.