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Goldman Sachs Predicts Bleak Long-Term S&P 500 Returns As Market Concentration Hits 'Highest Level In 100 Years'

Goldman Sachs has issued a stark warning for U.S. equity investors, predicting significantly lower returns for the S&P 500 over the next decade due to historically high levels of market concentration.

The firm's analysts, including David J. Kostin and Ben Snider, highlight that the current concentration in the U.S. stock market is the highest it has been in the past century, which they believe could weigh heavily on long-term index returns.

Market concentration currently ranks “near the highest level in 100 years,” analysts warned, adding that their “S&P 500 baseline 10-year return forecast is lower than the estimates of other market participants.” 

Long-Term Return Forecast: Only 3% Annually Over the Next Decade

Goldman Sachs forecasts that the S&P 500 will deliver an annualized nominal total return of just 3% over the next 10 years—placing it in the 7th percentile of historical returns since 1930. Adjusting for inflation, the real return is expected to be around 1%.

This projection stands in stark contrast to the past decade, where the S&P 500 delivered a robust 13% annualized total return, placing it in the 58th historical percentile.

“The current extremely high level of market concentration is one of the main drags on our return forecast,” analysts ...