CHART: Goldman's Bullish Vision Of The Stock Market's Future Is Really Something

Last week, Goldman Sachs’ David Kostin became the most bullish forecaster on Wall Street, raising his year-end target on the S&P 500 to 1,750 and unveiling his 2015 target of 2,100.

Here’s a chart of what that forecast looks like in the context of the dotcom and credit bubbles.  The trajectory almost seems irrationally bullish, but Kostin has his reasons.

goldman stocks

Assuming his earnings forecasts hold, which is a big assumption considering its low volatility and upward trajectory, valuations should hold relatively steady.

But they would nevertheless be on an upward trajectory.

“Our new P/E assumptions include a premium to our fair value models,” wrote Kostin.

goldman pe valuation

In his note distributed last night, Kostin reiterated his list of 6 reasons for being so bullish.

  1. Wide equity vs. bond yield gap.
  2. Stagnation ends.
  3. Recovery in labour and housing.
  4. Easy Fed Policy.
  5. Reasonable valuation.
  6. Better equity flows.

Kostin’s fifth point is a key one for many people. We wrote more about his rationale last week.

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