Goldman Sachs says: Expect a more ‘normal’ return to investing as stock picks are rewarded

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According to Goldman Sachs, Generation Alpha is poised to return to the wealth management industry as growth will be significantly less concentrated in a post-pandemic world marked by inflation and higher interest rates.

“We are returning to a more ‘normal’ cycle where we expect investors to be rewarded for making decisions,” said Peter Oppenheimer, chief global equity strategist at Goldman. sectors and stocks with regard to potential growth relative to what is valued. “This means going back to Alpha.”

The current bull cycle isn’t an ideal environment for stock pickers as most stocks have bounced back from the Covid-19 drop. However, this return to the market has pushed valuations to new highs, particularly in the growth-driven tech sector, which could lead to lower overall margins and less tech dominance. in the era of money hawks, the Wall Street firm said.

Goldman says tech stocks, especially the big names, have enjoyed much stronger earnings growth than the rest of the corporate sector over the past few years. FAAMG – Facebook (now Meta . Platform), Amazon, Apple, Microsoft and by Google Alphabet — is now 50% larger than the entire global energy industry and almost five times the size of the global auto industry excluding Tesla, according to Goldman.

“We believe we are entering a new environment where the influence of technology is rapidly expanding to impact almost every industry,” the strategist said. “In the future, it will become less easy to distinguish what is a company from what is not a technology company, and this will expand opportunities across more sectors.”

The hedge fund industry may have made a comeback as the community outperformed the market in a volatile January. Hedge funds lost an average of 1.7% last month, compared with the S&P 500’s worst January loss of 5.3% since 2009, according to HFR data.