If history could be our guide on the market, then 2019. looks to be very good for US stocks, according to Goldman Sachs.
After a decrease of 20%, the SP500 usually recovers within a quarter, and the historical precedents of political turmoil signal the absorption of a later presidential cycle. Expectations for a positive outcome from the US-China trade talks, as well as the Fed's tune-up, have raised the SP500 by more than 10%. Nevertheless, Goldman advises its investors to increase their cash and focus only on companies with high and stable gross profits, as they could withstand the rising costs of business development. According to Goldman, such shares are National Instruments Corp., Waters Corp., VMWare Inc. and Idexx Laboratories Inc.
High-quality assets would also be a good investment in 2019. Alphabet Inc., Comcast Corp., PepsiCo Inc., Halliburton Co., BlackRock Inc. and Wells Fargo Corp. are among companies that have a very good return on capital compared to the average of the SP500.
As a Goldman venture, we recommend tracking Micron Technology Inc., Corning Inc. and MGM Resorts International, as they remain the most affected by the dispute between China and the United States, but with exceptional development potential.
Source: Bloomberg Finance L.P.
Chart: Used with permission of Bloomberg Finance L.P.
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