The Meb Faber Show - Better Investing Goldman Sachs’ Peter Oppenheimer - Concentration & Correction: What To Do Next | #572
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Feb 28, 2025 Peter Oppenheimer, Goldman Sachs’ Chief Global Equity Strategist and author of 'Any Happy Returns', dives into the complexities of today's investment landscape. He discusses structural changes driven by macroeconomic factors and geopolitical tensions that shape super cycles. Oppenheimer delves into the implications of AI and de-carbonization on returns while emphasizing diversification as a key strategy. He also shares insights on the emotional phases of market cycles and the contrasting dynamics of U.S. markets versus European banks.
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Cycles and Sentiment
- Economic cycles correlate with equity cycles, as bear markets often anticipate recessions due to falling profits.
- There's a pattern where bear markets anticipate recessions, triggering corrections as investors adjust expectations.
Equity Cycle Phases
- Equity cycles have four phases: despair, hope, growth, and optimism, tied to investor sentiment.
- Hope phase, despite poor data, offers best returns due to rising valuations, while optimism phase sees lower returns.
Market Signals
- Extremely low ISM/PMI levels signal good future returns due to low expectations and valuations, a "blood on the streets" scenario.
- Conversely, positive data often means good news is already priced in, so expect lower returns.