People walk through the New York Stock Exchange (NYSE) building during the Covid-19 pandemic in New York on May 26, 2020.
Tayfun Coskun | Anadolu Agency | fake pictures
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The coronavirus pandemic, which appears to be experiencing a resurgence, is causing more turmoil in the market with the S&P 500 about to break a two-month winning streak. Goldman Sachs warns clients of more sudden changes and provides them with a strategy to do something about it.
“High volatility and low risk-adjusted returns are likely to persist, complicating performance prospects,” David Kostin, chief equity strategist at Goldman in the United States, said in a note. “The consensus expects a 9% rise in typical stocks in the next 12 months and volatility should remain high for the rest of the year, suggesting low risk-adjusted returns in the coming months.”
The bank believes investors should look at stocks with a high level of Sharpe ratio, which Kostin said will offer the best risk-adjusted returns in the future.
The so-called Sharpe ratio is a measure of a stock’s performance relative to its volatility. Goldman uses six-month consensus price targets and implied volatility options to measure the Sharpe indices.
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