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Goldman Sachs Doesn’t Recommend a ‘Buy and Hold’ Strategy

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Jul. 18 2017, Updated 7:44 a.m. ET

Goldman Sachs on ‘buy and hold’ strategy

Many asset management firms and fund managers are using different strategies like value investment strategies, buy and hold strategies, active investment strategies, and passive investment strategies to make money in the market (SPY) (VGK) (QQQ). On June 27, 2017, in a research note, Goldman Sachs (GS) wrote that a “buy and hold” strategy won’t do well in the present investment scenario.

According to the investment firm, this strategy worked well between 2005 and 2011. But in the present environment, it’s very difficult for investors to choose quality stocks and hold them for a long period to get spectacular returns. The investment firm wrote, “With returns on capital falling and growth lower, fewer companies are in the virtuous compounding circle.”

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Growth and earnings

Earlier, we saw that Goldman Sachs’s chief equity strategist, David Kostin, said that his firm believed the US economy will grow at a moderate pace in 2017. Moderate growth rates could affect the demand outlook of the economy (IWM) (VOO). Companies might invest less capital in their business, and it could hamper their sales growth, revenue growth, and earnings growth.

In the next part of this series, we’ll analyze a new investment strategy that Goldman Sachs’s recommends for the current scenario.

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