Meanwhile government bonds and money markets have yet to see outflows, suggesting “a large portion of positioning has still not moved into equity,” according to the note.
At this point, the bank remains in a camp that might best be described as mildly bullish. Goldman’s David Kostin has a 2020 year-end forecast for the S&P 500 of 3,400 -- the median among Wall Street strategists tracked by Bloomberg and a level about 2.4% above where it is now.
At the same time a slew of strategists warn systematic traders are already out over their skis, less than a month into 2020. Sundial Capital Research Inc. said Tuesday that speculation in U.S. stock options just “keeps getting crazier.” That follows recent warnings from Societe Generale SA that valuations are “a big risk,” while Deutsche Bank AG said earlier this month that positioning was “very stretched.”
Still, if some of the weakest hands in the market pare their exposures, Goldman says there are others ready to pick up the slack.
“Demand for equity from funds could increase and support the equity market in 2020,” the strategists wrote.
This article was provided by Bloomberg News.