## Goldman Sachs Pours Cold Water: The U.S. Stock Market Will Only Rise by an Average of 6.5% Over the Next 10 Years, What to Do?

Goldman Sachs just released a report, giving a warning to U.S. stock investors – in the next decade, the average annual return of the S&P 500 may only be **6.5%**, far below the historical average of 10%.

**Why so pessimistic?** Mainly two reasons:

**1. AI Bubble Price Compression Estimate**
The price-to-earnings ratio of the S&P 500 has soared to **23 times** (a multi-year high), and this is all supported by a few AI tech giants. It will take several years for this wave of valuation to normalize, which will also drag down the entire market. Goldman Sachs estimates that this alone will compress returns by about **1%** each year.

**2. Interest rates and tax rates will not decrease anymore**
In the past 30 years, the profit margins of the stock market have skyrocketed, mainly due to the continuous decline in interest rates and corporate tax rates. However, in the next decade, both of these benefits will be gone.

**So what should we do? Just change our mindset:**

▪ **Overseas Outlook** — The expected returns for Japan, Asia, and emerging markets are **8.2%, 10.3%, 10.9%**, all showing positive growth.
▪ **Layout Overseas ADR** — Foreign stocks priced in US dollars such as Alibaba and MercadoLibre can rise an additional **2 percentage points**/year when the US dollar depreciates (Goldman Sachs believes it is overvalued by 15%).
▪ **Mining Dividend Stocks** — High-dividend stocks like Coca-Cola and Pfizer will become an important part of returns over the next decade, and they are currently cheap due to being mispriced.

**Bottom line**: It's either to make a run for it, or stop going all-in on US tech stocks, and think more.