economy
Goldman sees risks of market correction rising
Investors should consider making some changes to their portfolios, Goldman Sachs said.
TL;DR
- Goldman Sachs warns of a potential stock market correction not fully buffered by bonds.
- Concerns about rising oil prices, geopolitical risks (Iran war), and AI disruptions have negatively impacted equities.
- Major indices like the Dow Jones, S&P 500, and Nasdaq Composite are down in 2026.
- Goldman's analysis suggests equities have not priced in enough risk premium for potential lasting shocks.
- The traditional buffer from bonds is expected to be limited, increasing the risk of larger portfolio drawdowns.
- Goldman has shifted its asset allocation defensively for the next three months, favoring cash.
- For the next six months, Goldman suggests overweighting equities.
- Investors are advised to consider strategies like quality trades, alternatives, dynamic risk allocation, and option overlays to manage stagflationary risks and drawdown risk.
- Defensive equities, CTAs, gold, TIPS, and S&P 500 put spreads have historically helped performance against drawdowns.