Goldman Sachs is looking optimistically ahead to the New Year despite its prediction that 2016 will bring more volatility than the market has seen in the past three years, according to a report issued Monday.

In its "Last Innings" report, Goldman Sachs Private Wealth Management says the U.S. economy is on a more solid footing than generally believed, but the theme of 2016 will be greater volatility than what has been experienced in recent  years.

The title of the study, The Last Innings, refers to the fact that Goldman Sachs feels the bull market is not over yet.

“The current bull market has lasted 81 months and provided a total return of 249 percent. It has exceeded all but two bull markets in length and all but three in amplitude. Longevity and level of returns alone are not sufficient to signal the end of the bull market. Indeed, we remain cautiously optimistic that there are a few innings left,” says Goldman Sachs.

In keeping with its positive view of the U.S. economy, the report recommends investors stay invested in U.S. equities where a 3 percent return is expected. That compares with a 1 percent expected return for cash and negative returns for high-quality fixed income, driven by its expectation that the Federal Reserve raises interest rates by about 100 basis points over the year.

Goldman Sachs also recommends investing in developed market equities where a 10 percent return is predicted, ranging from 8 percent for UK equities to 12 percent for the Euro Stoxx 50.

The report predicts economic growth in the United States will be 2 percent to 2.75 percent in 2016 compared to a 1.25 percent to 2 percent growth in the Eurozone and 4 percent to 4.5 percent in emerging markets.

But the report identifies several risks that may derail the continued recovery, including potential disruptions in the financial markets caused by political upheavals around the world, further declines in oil prices, major cyber attacks and continued problems in China.