Peter Oppenheimer, the chief global equity strategist at Goldman Sachs, shared insights on the current state of the stock market during a Bloomberg TV interview.
He expressed that stocks are generally "pretty fully valued" and emphasized the importance of diversification in an investment climate where valuation expansion is not expected to be the primary driver of growth.
Oppenheimer highlighted his preference for geographical diversification, despite acknowledging that Europe currently has the lowest profit growth forecasts. Nonetheless, he identified that certain segments within the European market are "very cheap."
He expressed a favorable view on the healthcare sector and pointed out the unusual but positive performance of a combination of U.S. technology and European banks, underscoring the benefits of diversification.
The strategist also mentioned that Goldman Sachs is overweight on both equities and bonds. Within the equity market, he advised investors to expand their exposure in the U.S. beyond the major seven tech giants, commonly referred to as the MAG 7, which includes companies like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOGL).
While these companies are expected to continue generating good returns, Oppenheimer cautioned that the risks associated with them are increasing.
Looking ahead, Oppenheimer anticipates a rise in mergers and acquisitions (M&A) activity, driven by a resurgence of "animal spirits" in the U.S. and a more permissive attitude towards consolidation in Europe. He noted the exceptional strength of the U.S. dollar, which continues to climb, making European and UK assets, some of which are very attractively priced, more appealing to U.S. buyers.
Furthermore, Oppenheimer expects an uptick in initial public offerings (IPOs) and activity from private equity firms. He pointed out that these firms are likely to sell assets they have been holding, given the current market conditions.
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