“US equity investors have focused more on hope than fear since Donald Trump’s election,” David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc. wrote in his 2017 outlook. “Hope will dominate during the first part of 2017. The prospect of lower corporate taxes, repatriation of overseas cash, reduced regulations, and fiscal stimulus has already led investors to expect positive EPS revisions.”
Not only are stocks rising, they’re offering fertile ground for a category of mutual funds that suffered as the Obama rally devolved into a monolith of lockstep moves. Dispersion among S&P 500 stocks, trader lingo for the ability of share prices to chart an independent course, is increasing and poised to get better, according to Goldman.
Next year will bring “opportunity for alpha generation,” due to macro and micro shifts associated with Trump administration and aging economic cycle, Kostin wrote in a note to clients this week. By one measure, dispersion the week after the election reached the biggest in almost eight years.
This article was provided by Bloomberg News.