Stocks bonds options to buy in 2023: Goldman Sachs strategy outlook

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Goldman Sachs lays out its strategy for profiting with stocks, bonds, and options in 2023 despite a rocky year — and why investors shouldn't make any big strategy changes

The firm's investment strategy group discussed its multi-asset views this week. The simultaneous nosedive in stocks and bonds last year doesn't debunk the theory behind the traditional 60-40 portfolio, according to Goldman Sachs. And anyway, it's not a good time to reinvent your strategy.

Anyone who changes strategy now — for example by substantially revamping their allocations or by ditching bonds and adding alternatives — is betting that returns for the traditional 60% stock, 40% bond portfolio will have a bad year. But that's out of line with history, she said. The ISG thinks the chances of a recession in the next two years are between 65% and 70%, but Nelson says that doesn't mean stocks will suffer a prolonged slump. In fact, he noted that if a recession begins and ends in 2023, stocks may not have a bad year. He thinks the S&P 500 will finish the year between 4,200 and 4,300 even if there's a recession.

"The combination of slightly lower interest rates this year combined with the fact that bonds today just start with much higher levels of yields given the backup in yields we had last year, that implies attractive return for fixed income," Nelson said.

 

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