Goldman Sachs Favors Stocks Over Credit as Late-Cycle Risks Mount

Goldman Sachs has recommended an overweight position in stocks and an underweight stance on credit assets over the next 12 months. The bank expects solid corporate earnings, slowing but resilient economic growth, and low odds of a US recession to support equities.

The warning signs are rising, however. Goldman Sachs warned about high bond yields, fiscal concerns, and stubborn inflation, which could limit further gains in the stock market. To mitigate these risks, the bank suggested diversifying portfolios with low-volatility stocks, high-dividend shares, gold, and real assets.