‘How investors can outperform the benchmarks’ by Goldman Sachs

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

TSX shakeup

Scotiabank strategist Jean-Michel Gauthier attempted to predict the new stocks, and the deletions, in the TSX.

He expects Taseko Mines Ltd (TKO-T), Allied Gold Corp. (AAUC-T), Bitfarms Ltd. (BITF-T), Silvercorp Metals Inc. (SVM-T), Vizsla Resources Corp (VZLA-T), Lithium Americas Corp (LAC-T) and 5N Plus Inc. (VNP-T) to be added.

His picks for potential deletions are Canada Packers Inc. (CPKR-T) and Cargojet Inc. (CJT-T)

Pathway forward

Goldman Sachs weekly Briefings email bravely attempted top outline how to outperform equity benchmarks for the next decade,

“How investors can outperform the benchmarks: The $250-trillion World Portfolio encompasses virtually all the globe’s investable assets and is an important influence on how money is allocated. When investors plan an ideal portfolio for the next decade, they may very well use the World Portfolio as a guide. But simply following the World Portfolio may miss out on promising smaller assets like in emerging markets, commodities, and alternatives such as private markets, says Christian Mueller-Glissmann, head of asset allocation in Goldman Sachs Research. ‘It’s backward looking and often overlooks smaller, diverse assets in favor of those that don’t always deserve the weightings they get,’ Mueller-Glissmann says of the World Portfolio. A number of approaches have outperformed the World Portfolio over longer time horizons. A simple portfolio of 60-per-cent stocks and 40-per-cent bonds had a better risk-adjusted return (Sharpe ratio) since 1950, for example. Going forward, Goldman Sachs Research sees benefits from strategic tilts of benchmarks as well as allocations to selective smaller assets and alternatives. For example, investments in emerging market assets, gold, or haven currencies such as the Swiss franc can lower the risks to portfolios from a weakening U.S. dollar. Emerging market assets are negatively correlated with the U.S. currency, and sectors such as China’s technology firms may help diversify disruption risks for mega-capitalization U.S. technology companies”

Tired?

Citi chief U.S. equity strategist Scott Chronert sees investor exhaustion and the end of the Magnificent Seven,

“Whether it’s navigating the AI theme or broader macro influences, our sense is that investor sentiment is best described as ‘exhausted’ as we approach the holiday season. Post the recent drawdown, the S&P 500 is near our 6600 year-end base case, which we characterize as fair value. While earnings growth into 2026 looks strong, shifting expectations for terminal valuations are unfolding. The market is weighing the productivity promise of AI against its implications for labor and business models. The Magnificent 7 is becoming more idiosyncratic, a theme which we think persists into 2026 … Magnificent 7 Idiosyncrasy — The Magnificent 7 are increasingly trading on idiosyncratic fundamental setups. While NVDA and GOOGL have had significant year-to-date returns, META, TSLA, and AMZN have not contributed positively to S&P 500 returns. The market is clearly weighing the individual components of the group as related to AI and other company specific influences. NVDA, MSFT, and AAPL, aggregating to 20 per cent of the index, are the most important bellwethers for the Mega Cap Growth trade from here”

Bluesky post of the day

Diversion

“About This Account reveals the scale of X’s foreign troll problem” – The Verge