Goldman Sachs: Only perfection is marketable

Diversifying investments has become even more important in 2025, says Goldman Sachs research report. According to the investment bank, the interest rate reduction programs of the central banks provide a good basis for the rise of stocks, but there is danger in high valuation levels, especially in American stocks.

“The strong rise in stock prices in recent months has priced many stocks to perfection. Although we expect the stock market to rise next year as a whole, the market is vulnerable to corrections either due to weaker-than-expected results or economic data,” writes Goldman Sachs’ chief international equity market strategist and head of European macro research Peter Oppenheimer.

According to the Goldman Sachs report, it will be difficult to avoid market disappointments, especially for the Power Seven stocks that have dominated the stock market in recent years, which grew by a total of 47 percent last year. As a point of comparison, the median company in the S&P 500 index grew by 10 percent.

Disappointing results for these companies could have significant effects worldwide, as global markets are currently highly concentrated. Regionally to the United States, by industry to the technology sector and to a very limited number of companies. The five largest companies in the S&P 500 index account for 25 percent of its market share.

“However, it is encouraging that the dominance of techno companies has so far also been a guarantee of strong economic growth,” writes Oppenheimer.

However, in the report, Goldman Sachs’ portfolio team recommends increasing regional and industry diversification as risks increase. According to them, there are many countries and companies in the world that have benefited from the strengthening of the dollar, which have not been priced in the same way compared to American companies.

For these reasons, companies outside the US and the techno sector that produce steadily throughout the economic cycle are good targets to balance the portfolio.