Now Goldman is Bullish

Two weeks ago, on March 31, I sent you an email with the subject:

“Goldman is bearish, so what?”

The Kelly Letter had just followed its quarter guidance—enormous buy signals across the board—and some subscribers were worried that it had done so right into the maw of a crash foretold by none other than Goldman Sachs.

The firm said that investors could not be confident that a new bull market had begun until the virus spread in the United States began tapering, stimulus measures were working, and Goldman’s US Equity Sentiment Indicator bottomed out.

I wrote that bulls could counter all three:


  • On a semi-log plot, worldwide cases of the virus are already leveling out. We’re not out of the woods yet, but we can envision getting there—and the stock recovery will beat us out of the woods.

  • Anybody waiting for confirmation that bankruptcies will be avoided is going to miss the recovery. How many bankruptcies are fine by Goldman? Surely more than zero, so when does the green light for bankruptcy avoidance go on? Probably about the time the S&P 500 reaches the firm’s 3000 target level.

  • Maybe Goldman’s sentiment indicator has not bottomed (Although, how can they know?), but others have shown grim sentiment. CNN’s Fear & Greed Index already reached the extreme fear levels it bottomed at in the fourth-quarter 2018 crash. The CBOE Volatility Index (VIX) reached the same panic zone it reached in the subprime mortgage crash.


Yesterday, Goldman flipped bullish.

The same team of z-val strategists lead by chief coin tosser David Kostin wrote in a note to clients that the worst of the crash is behind us.

The team admitted that its “previous near-term downside of 2000 [for the S&P 500] is no longer likely. Our year-end S&P 500 target remains 3000 (+8%).”

Here’s why:

“The combination of unprecedented policy support and a flattening viral curve have dramatically reduced downside risk for the US economy and financial markets and lifted the S&P 500 out of bear market territory. …

“If the US does not experience a second surge in infections after the economy reopens, the ‘do whatever it takes’ stance of policy makers means the equity market is unlikely to make new lows.”

Then—and this will sound familiar—the firm pointed out that bear markets usually end before economic bad news reaches its worst.

The same David Kostin crew sent a note to clients on March 20 (one trading session ahead of the bottom):

“We now forecast S&P 500 EPS of $110 in 2020, a decline of 33% from 2019. … We have cut our 2020 earnings forecast three times in 30 days (-37% in total) as the magnitude of the economic slowdown has become increasingly apparent. …

“The stock market is a leading indicator of business trends, and corporate activity continues to deteriorate with no signs yet of a bottom. The first quarter has not even ended and companies have yet to release 1Q results but equities have already collapsed by 32% in one month. The speed of business erosion is unprecedented. …

“In the near-term, we expect the S&P 500 will fall towards a low of 2000.”

From that day’s close through yesterday’s, here’s how SPY and our ETFs have performed:

+20%  SPY

+18%  IJR
+44%  MVV
+59%  TQQQ

Thanks for the warning, Dave & Co.

To become a Goldman Sachs Private Wealth client, you must invest at least $10M. The firm will charge 1.15% to manage it, which comes out to $115,000 at the entry level for the firm’s trademarked coin-toss accuracy.

The Kelly Letter costs $200, requires no minimum account size, and never tosses coins.

Stick with our brand of price reaction.

It’s affordable, cuts through narrative fallacy, and grows your wealth without stress from indecision.

This entry was posted in Stock Market Forecasts and tagged , . Bookmark the permalink. Both comments and trackbacks are currently closed.


  1. Chris Brzys
    Posted April 15, 2020 at 4:45 am | Permalink

    A friend recommended me to you but I really don’t have any experience. Do you offer other services to get someone started on the right track?

    • Posted April 15, 2020 at 2:07 pm | Permalink

      I’m glad to have you, Chris.

      The User Guide on the subscriber site will get you started.

      The short answer is that you should start your plans at their base reset allocations, which are:

      80/20 stocks/bonds in 3Sig
      60/40 stocks/bonds in 6Sig and 9Sig

      If you are nervous about starting at the full stock allocations, feel free to divide them up, maybe half now and half at the next quarterly signal or other time frame that suits you.

      Once you are in place at the base reset allocations, just follow the quarterly signals.

      You will be amazed to see your wealth grow over time while media punditry worry other investors to the sidelines.

      Happy Sigging,

  2. Robert Eshleman
    Posted April 15, 2020 at 12:41 am | Permalink

    Thanks again for the commentary and shining the light on the massive amount of disinformation that is so abundant in the investment world.

    Jason, you stand as a beacon of reason and truth for investors in your sphere of influence.

    Thank you, sir, for your help and guidance.

    Bob E.

    • Posted April 15, 2020 at 2:04 pm | Permalink

      My pleasure, Bob, and thank you for the compliment.

  3. Paul Bonomi
    Posted April 15, 2020 at 12:13 am | Permalink

    Great! The mid-week comments are much appreciated.

  • The Kelly Letter logo

    Included with Your Subscription:

Bestselling Financial Author