高盛｜进入2024年：多资产投资者的10个问题

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11January2024|4:55PMGMT

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10Questionsformulti-assetinvestorsentering2024

1.Howdidmulti-assetportfoliosperformin2023?60/40portfoliosralliedintoyear-endbutcommodities,ChinaassetsandUSvaluestockslagged.

2.Can60/40portfolioscontinuetoperformstronglyin2024?Elevatedrisk

appetiteandlessnegativeinflationmomentumreducestheupsidepotentialbutdrawdownriskshouldbelower,helpingrisk-adjustedreturns.

3.Istherestillriskofa‘lostdecade’for60/40portfolios?Valuationsarelowerbutremainelevatedinalong-runcontextforequities-strongprofitgrowthwithanchoredinflationisnecessarytorecoverfromthe‘real’drawdown.

4.Areelevatedequityvaluationsgoingtobecomeaspeedlimitforreturnsin2024?Valuationsarenotagoodpredictorfor12mreturnsandcanremain

elevatedifmacroconditionsarefavorablelatecycle.Also,USexcludingTech,non-USandnon-cyclicallyadjustedequityvaluationsaremuchlesselevated.

5.Arebondsstillabletobuffergrowthshocksafterthestrongrally?Marketsmightchallengedovishcentralbankpricingnear-termbutwithcontinued

inflationnormalisationweexpectequity/bondcorrelationstobelesspositive.

6.Aretheremoreopportunitiestoaddprocyclicalriskin2024?Theremightbeahandoverfromraterelieftogrowthasdriverofriskappetiteandthereare

selectivelaggardsincludingsmallcapsandselectiveEMassets.

7.Istherestillvalueininflationhedgesandrealassets?Inflationhas

moderatedbuttherecanbedisappointmentsnear-termandstructuralchallengesremain:inflationhedgesandrealassetsalsoappearattractivelypriced.

8.Isequityvolatilitylikelytopickupin2024(andratesvolatilitytodecline)?

Thelikelihoodofalowvolregimehasdeclinedbutremainsabovenormal.Geopoliticaluncertaintymightdrivemorevolatility.

9.Wheredoyouseeattractivecarryopportunities?Riskpremiaacrosscarry

tradesarelowafterastrong2023butwithouroptimisticmacrobaselinewestillseeopportunities,e.g.infinancialscredit,agencyMBS,ratesvolcarry.

10.Whatoptionstrategiesdoyoulikeformulti-assetportfolios?Withthevolresetinriskyassetswelikeequityputspreads/collarsandupsidetoprocyclicallaggards.

ChristianMueller-Glissmann,

CFA

+44(20)7774-1714|christian.mueller-

glissmann@

GoldmanSachsInternational

CeciliaMariotti

+44(20)7552-0450|

cecilia.mariotti@

GoldmanSachsInternational

AndreaFerrario

+44(20)7552-4353|

andrea.ferrario@

GoldmanSachsInternational

PeterOppenheimer

+44(20)7552-5782|

peter.oppenheimer@

GoldmanSachsInternational

ThisreportisintendedfordistributiontoGSinstitutionalclientsonly.

Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ForRegAC

certificationandotherimportantdisclosures,seetheDisclosureAppendix,orgoto

/research/hedge.html.

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GoldmanSachs

10Questionsformulti-assetinvestorsentering2024

(1)Howdidmulti-assetportfoliosperformin2023?

Global60/40portfoliosperformedverywell,especiallyintoyear-end,andmostlyduetostrongequityperformance.2023turnedouttobeabetteryearfor

performanceacrossassetsafterthe‘bearmarketineverything’in2022(Exhibit1)-

especiallyintoyear-endtherewasastrongrallyformulti-assetportfolios,fuelledby

bondmarkets.Therewerestillseveralassetsthatwereadragonmulti-assetportfoliosandpostednegativereturns,oftenfollowingapoor2022already-thoseincludedEMandChina-relatedassetsincludingcopper,theYen,USvalue,banksandlowvolstocks.

Exhibit1:Bettercross-assetperformancein2023afteradifficult2022

50%+96%20232022

25%

0%

-25%

FANG+

Nasdaq

Topix

SX7P

-50%

S&P500

MSCIWorld

Japan60/40

US60/40

Russell2000

STOXX600

Fin.vs.staples

USHY

Europe60/40

USRiskParity

S&PGSCIGold

Momentum

EURHY

Cycv.Def

MSCIEM

USIG

EURIG

MXAPJ

Germany10y

CHFvsEUR

TIPS10y

USDCash

US10y

EURvsUSD

US30y

Japan10y

Copper

S&Plowvol

EMFX

Japan30y

BKX

DXY

CNHvsUSD

S&PGSCI

S&PGSCIInd.Mat.

S&PGSCIEnergy

JPYvsUSD

Valuevs.Growth

Source:Bloomberg,Datastream,GoldmanSachsGlobalInvestmentResearch

While2023turnedouttobeastrongyearfor60/40portfolios,performancewasnotinastraightline(Exhibit2).Inthefirsthalfoftheyearequitiesralliedwithbondsgenerally

beingrange-bound-eventuallyinQ3,bondsstartedsellingoffmorelong-datedbonds,whicheventuallyweighedonequities.InQ4bothequitiesandbondsrecoveredstronglytogether.Thisdroveaparticularlystrongrecoveryinriskparitystrategies,whichlaggedformostof2023duetolargerfixedincomeweights(Exhibit3).

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2022

2023

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Exhibit2:Afteradifficultsummer60/40portfoliospostedastrongreturnin2023

Totalreturnperformanceindexedto100atthestartof2023

122

US

120

EuropeJapan

118

116

114

112

110

108

106

104

102

100

98

Apr-23Jul-23Oct-23Jan-24

Jan-23

Exhibit3:RiskparityportfolioshadaparticularlystrongreboundinQ4

Totalreturnperformancerebasedto100atthestartof2023(weightedinverselyby3mrealisedvolatilityofequityand10ybonds)

114

US

112

Europe

Japan

110

108

106

104

102

100

98

Apr-23Jul-23Oct-23Jan-24

Jan-23

Source:Datastream,GoldmanSachsGlobalInvestmentResearchSource:Datastream,GoldmanSachsGlobalInvestmentResearch

Infact,foraUS60/40portfolio,nominalreturnsof17%in2023rankinthe76th

percentilesince1900-thisofcoursefollowedoneoftheworstreturnsinmorethanacenturyin2022.Andrisk-adjustedreturnsforthewholeyearwerelowerduetothe

drawdownduringthesummer.However,therecoveryofUS60/40portfoliosinQ4,

roughly13%,wasoneofthestrongestralliesinthelastcentury-theaveragemelt-upovera3-monthperiodsince1990wasonly7%.

Exhibit4:2023wasagoodyearforUS60/40portfolios...intheend

Datasince1900

Nominal

Real

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

<-20%

-20%to-15%

-15%to-10%

-10%to-5%

-5%to0%

0%to5%

5%to10%

10%to15%

15%to20%

20%to25%

25%to30%

30%to35%

35%to40%

>40%

US60/40portfolio12mrollingreturn

Exhibit5:TheQ4reversalfor60/40portfolioswasoneofthestrongestinmorethanacentury

60/40rollingtotalreturnfromtheprevious3mtrough

20%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

1900191019201930194019501960197019801990200020102020

Source:RobertShiller,GoldmanSachsGlobalInvestmentResearchSource:HaverAnalytics,Datastream,GoldmanSachsGlobalInvestmentResearch

(2)Can60/40portfolioscontinuetoperformstronglyin2024?

Returnsarelikelytoslow-favorablemacroconditionsshouldsupport

risk-adjustedreturnsbutrighttailriskappearslimited,especiallyafterthestrongQ4rally.In2023theUShadan‘inverse’Goldilocksbackdropwhere,despitea

late-cycleposition,inflationdeclinedandgrowthremainedresilient-ourUSbusiness

cyclescoresshowhowunusualthishasbeensince1950.60/40portfoliosandequitiestendtodeliverstrongrisk-adjustedreturnswithfallingandlowinflationaswellas

stable,stronggrowth.OureconomistsexpectUSgrowthtoremainresilientwithfurtherinflationnormalisation,eventhoughinflationmomentumislikelytobeless

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negative.Inadditiontheyexpecttheglobalgrowth/inflationmixtoimprovefurtherwithDMgrowthexUSforecasttoaccelerateandinflationtodeclinefurther.

Exhibit6:Growth,inflationandpolicycanhavedisconnectsthroughthebusinesscycle

Averageexpandingz-scoreofmacroandmarketvariablesacrossgrowth,inflation,andpolicy

Morelatecycle,

higherinflation&

tighterpolicy

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

-0.5

-1.0

-1.5

-2.0

-2.5

505560657075808590950005101520USrecessionGrowthscoreInflationscorePolicyscore

Source:HaverAnalytics,Bloomberg,Datastream,GoldmanSachsGlobalInvestmentResearch

Themainchallengeforinvestorsisthatafterthestrongrallyintoyear-endsentimentandpositioninghavealreadypickedupandreflectamoreoptimisticmacrooutlookfor2024,muchincontrasttoearly2023(Exhibit7).Especiallyinvestorsentimenthaspickedup

materiallybutalsoequityfuturespositioningisnearall-timehighs,equityfundflows

haveincreasedandlowequityvolatilityhaslikelyattractedsystematicinvestors.Fromelevatedlevelsofouraggregatesentimentandpositioningindicatorrighttailrisktendstobecappedwithloweraveragereturnsbutitdoesnotnecessarilymeanmore

drawdownrisk(Exhibit7).Puttingmacroandsentimenttogethersuggeststhatthe

risk/rewardislessattractivecomparedtothebeginningof2023butmuchbetterthanin2022wheninvestorswerebullishdespiteworseningmacroconditions.

Exhibit7:Sentimentandpositioningindicatorshaveturnedmorebullish,especiallyforequities

Percentileofpositioningandsentimentindicatorssince2007

7

5

3

1

AverageUSEquityCFTCfuturepos.

AAIIBullv.Bear(US)Inv.IntelligenceBullv.Bear(US)

GlobalEquityFlow(3m)GlobalEquityFlow(12m)VIX

GSRAI(GSRAII)

RiskyBondsFlows(3m)

GSRAIMomentum(GSRAIM)JPY&GoldCFTCfuturepos. RiskyBondsFlows(12m) USCall/PutVolumeRatioEquityRiskParityAllocationSafeBondsFlows(3m)

CTABetatoEquity(3m)SafeBondsFlows(12m)

RISK-OFF

End-22Current

Mar-23

RISK-ON

Jul-23

17

15

13

11

9

7

5

3

1

0%20%40%60%80%100%

Exhibit8:Fromhighlevelsofpositioning,upsidetendstobemorecapped

S&P50012-monthsubsequentreturnsfordifferentpercentilesofourPositioning&SentimentIndicator

Averagemaxupside(next12-month)Average(next12-month)

AveragemaxDD(next12-month)

30%

25%

20%

15%

10%

5%

0%

-5%

-10%

-15%

-20%

0%to25%25%to50%50%to75%75%to100%

AveragepercentileofPositioning&SentimentIndicatorbetween...

PositioningMoreBearishPositioningMoreBullish

Source:HaverAnalytics,Datastream,GoldmanSachsGlobalInvestmentResearchSource:HaverAnalytics,GoldmanSachsGlobalInvestmentResearch

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Ourdynamicassetallocationmodel(usingmachinelearning)issendingasimilar

message(Exhibit9):whilelowerinflationlevelsandmomentumhavereducedlefttailriskfor60/40portfolios,pointingtolesspositiveequity/bondcorrelationseventually,

policytighteningandresilientgrowthhavepreventedalargerdeclineofthe60/40

drawdownprobability.Akeyriskfor60/40portfoliosremainsupwardpressureon

long-datedbondyieldsduetosupplyaswell.Ontheflipside,thelikelihoodofalarge

recoveryin60/40portfoliosisrelativelylow,owingtoalreadyelevatedriskappetite,acontinuedlate-cyclepositionandlessnegativeinflationmomentum.Recentlyinflationmomentumhasbeenmorenegativeagain,helpedbyoilandbreakeveninflation,which

increased60/40righttailriskabit-butastoday’shigher-than-expectedUSCPIprint

shows,thereisalsoriskofdisappointments.Therisk/rewardfor60/40portfolioshasimprovedbutmainlyonlowerlefttailrisk-upsideislikelytobecapped.

Exhibit9:Whilethelikelihoodoflarge60/40drawdownshasdeclinedfromlastyearitremainselevated(andrighttailriskislow)

Randomforestprobability(dottedlines=unconditionalprobabilities);barchartdecomposesthecurrentprobability(latestscoreinbrackets)

10pp

8pp

6pp

4pp

2pp

0pp

45%

Inflation

mom.(-0.8)

40%

Inflation

35%

30%

score(-0.5)

RAI(+1.0)

25%

Policy

score(+1.0)

20%

Policy

mom.(+0.2)

Growth

score(+0.5)

Growth

mom.(-0.3)

-2pp

15%

-4pp

10%

-6pp

5%

-8pp

0%

505560657075808590950005101520

-10pp

<0%>20%

60/40return

60/4012mfwdreturn<0%60/4012mfwdreturn>20%

Probabilityof60/40return<0%Probabilityof60/40return>20%

Source:HaverAnalytics,Bloomberg,Datastream,GoldmanSachsGlobalInvestmentResearch

(3)Istherestillriskofa‘lostdecade’for60/40portfolios?

Yes,buy-and-holdinvestorssince2021arestilldown12%inrealterms.Attheendof2021,wewrotethatbalancedportfolioswereatriskofa‘lostdecade’owingtoveryelevatedvaluationsofbothbondsandequitiesposttheCOVID-19recovery,andhigh

andrisinginflation.In2022global60/40portfolioshadindeedoneoftheirlargest

drawdownsonrecord,triggeredbyaggressivecentralbanktightening.Onthebackofdisinflationandexpectationsforcentralbankeasing,aUS60/40portfoliorecovered

mostofthedrawdownin2023,atleastinnominalterms(Exhibit10).

ButinrealtermsaUS60/40portfolioisstilldown12%duetorealvalueerosionfrominflationthelast2years.Toavoida‘lostdecade’,i.e.zerorealreturnsafter10years,forbuy-and-holdinvestorssince2021,theyneedtoachievearealreturnofatleast2%p.a.inthecoming8years(Exhibit11).Inordertoachievethelong-termaveragerealreturnof5%p.a.forthedecadestartingin2022,investorsneedcloserto8%realreturns

fromhere.

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Exhibit10:In2023US60/40portfoliospartiallyrecoveredfromthelargedrawdownin2022

Maximum10-yeartotalreturn60/40drawdown(dailydatawhereavailable)

Real

Nominal

-70%

0%

-5%

-10%

-15%

-20%

-25%

-30%

-35%

-40%

-45%

-50%

1900191019201930194019501960197019801990200020102020

Source:Datastream,HaverAnalytics,GoldmanSachsGlobalInvestmentResearch

Exhibit11:Forinvestorsthatwereinvestedsince2021thereisstillriskofa‘lostdecade’

10-yearrollingrealreturn(p.a.);dottedlinedenoteslong-runaverage

Forwardrealreturnscenarios

10%

8%

5%

2%

0%

18%

16%

14%

12%

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

1900191019201930194019501960197019801990200020102020

US60/40cumulativerealreturn(p.a.)startingfrom

Source:HaverAnalytics,GoldmanSachsGlobalInvestmentResearch

ThecombinedvaluationstartingpointforaninvestorinaUS60/40portfoliois

betterbutstillelevated(Exhibit12).Afterthelargesell-offsince2022bondsareless

expensive.CurrentUS10-yearyieldsnearthe50thpercentileandclosetotheir300-yearaverageof4.6%(excludingthe1970sresultsinanaverageof4.4%).Thissuggests

bondsshouldbelessofadragon60/40portfolioreturnsgoingforward.However,USequityvaluations,asmeasuredwiththecyclically-adjustedS&P500ShillerP/E,arestillelevatedandinthe95thpercentile.Thishasbeenparticularlythecaseafterthestrongrallyintoyear-end.

Exhibit12:Whileequitiesremainrelativelyexpensive,bondyieldsarenowaboveaverage

Valuationpercentile(since1871)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1900

1910

192019301940195019601970198019902000

AverageShillerP/EUS10-yearyield

20102020

Source:RobertShiller,HaverAnalytics,GoldmanSachsGlobalInvestmentResearch

60/40returnsinthenextdecadewillnotjustdependonthevaluationstarting

pointbutalsomacroconditions.AswewroteinBalancedBearDespair-Part1,

valuationscanmoveinlongcyclesdrivenbythestructuralgrowth/inflationmix-60/40portfoliostendtosufferduringprolongedperiodsofhighinflationorstagnation-

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stagflationperiodstendtobetheworst.Ontheflipsideso-calledGoldilocksperiods

withlowinflationbutstronggrowth,oftenduetoproductivitygrowth,tendtoresultinthehighestrisk-adjustedreturnsfor60/40portfolios.

Inthelast20years,60/40portfolioswereboostedbylowflationwithrelatively

strongprofitgrowthinthecorporatesector.Updatingour60/40LTreturnforecast

model,basedoncurrentvaluationsaswellasassumingsimilardividendgrowthand

inflationasinthelast20yearsexpectedreturnsforthenextdecadearelikelytobe

belowthelongrunaverage(Exhibit13andExhibit14).However,themodelassumes

somevaluationmeanreversion,whichmightnothappeninasoftlandingwithanchoredinflation,anditmightunderestimatebenefitsandoptimismaroundproductivitygrowth,e.g.duetoAI.

Exhibit13:Withsimilardividendgrowthandinflationasinthelast20years,60/40portfoliosarelikelytoofferanaveragerealreturninthenextdecade

18%60/4010yearrealreturn(annualised)

Forecastbasedonvaluations(R2:0.26)

Forecastbasedonvaluations,dividendgrowthandinflation

16%(R2:0.81)

14%

12%

10%DPSgrth:10%

Inflation:2%

8%

6%

4%4.6%2%

0%0.8%-2%

-4%

-6%

19001910192019301940195019601970198019902000201020202030

Source:RobertShiller,Datastream,GoldmanSachsGlobalInvestmentResearch

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Dividendgrowth(next10years)

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Exhibit14:Expectedrealreturnsfor60/40portfoliosinthenextdecadeareclosertothelong-runaverage

US60/4010-yearrealreturnscenarios(modelestimatedsince1900)

US60/40realreturn=5.0%-0.25%x(S&P500ShillerP/E-16.5)+0.67x(US10yryield-4.6%)

+0.53x(10yrDPSgrowth-4.5%)-1.33x(10yrCPIinflation-3%)

-6%-4%-2%0%2%4%6%8%10%12%

14%

0.0%

-1.3%

-0.2%

0.9%

1.9%

3.0%

4.1%

5.1%

6.2%

7.3%

8.3%

9.4%

US

0.5%-1.9%-0.9%0.2%1.3%2.3%3.4%4.5%5.5%6.6%7.7%

8.8%

1.0%-2.6%-1.5%-0.5%0.6%1.7%2.7%3.8%4.9%6.0%7.0%

8.1%

CPIinflationinthe

next10

1.5%

-3.3%

-2.2%

-1.1%

-0.1%

1.0%

2.1%

3.2%

4.2%

5.3%

6.4%

7.4%

2.0%-3.9%-2.9%-1.8%-0.7%0.4%1.4%2.5%3.6%4.6%5.7%

6.8%

2.5%-4.6%-3.5%-2.4%-1.4%-0.3%0.8%1.8%2.9%4.0%5.0%

6.1%

years

3.0%

-5.2%

-4.2%

-3.1%

-2.0%

-1.0%

0.1%

1.2%

2.2%

3.3%

4.4%

5.4%

3.5%

-5.9%

-4.8%

-3.8%

-2.7%

-1.6%

-0.6%

0.5%

1.6%

2.6%

3.7%

4.8%

4.0%

-6.6%

-5.5%

-4.4%

-3.4%

-2.3%

-1.2%

-0.2%

0.9%

2.0%

3.0%

4.1%

Note:Themodelisbasedonaregressionof10-yearrollingUS60/40realreturnsonstartingvaluationsaswellasdividendgrowthandinflationduring

ittbsLoa1tirliur/ttiog6-0aoandtheregression

Source:RobertShiller,Datastream,GoldmanSachsGlobalInvestmentResearch

(4)Areelevatedequityvaluationsgoingtobecomeaspeedlimitforreturns?

Yesbutitislessofabindingconstraint;alatecyclebackdropwithfallinginflationcansustainelevatedequityvaluations-buttheylimitrighttailriskfor2024.

Valuationshaveamixedtrackrecordforpredictingreturns.Theyarealsomoreusefulforforecastinglong-termreturns-theR2increaseswithforecasthorizon,bothforequitiesandbonds(Exhibit15).Thisisbecauseovertheverylongrun,theretendstobemean

reversionofvaluationsfromextremes,oneofthekeytenetsofvalueinvesting.For

exampleelevatedequityvaluationsarelikelytodeclineincaseofarecession,which

happensonaverageevery7-8years.Stillforequities,valuationsexplainedlessthanhalfthevariationof10-yearreturnssince1900.

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Exhibit15:Valuationshavelimitedpredictivepower

R2ofvaluationsforsubsequentreturns.Valuationmetricinparenthesis

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Since1900Since1950Since1990

1y3y5y10y1y3y5y10y1y3y5y10yS&P500(ShillerP/E)10yUSbonds(10yyield)60/40(60/40yield)

Source:RobertShiller,GoldmanSachsGlobalInvestmentResearch

Equityvaluationscanremainelevatedaslongasmacroconditionsremain

supportive-asoftlandingwithdisinflationcoupledwithhigherLTgrowth

potentialcansupporthighervaluations.Cyclicalriskpremia,e.g.equityandcredit

riskpremia,tendtoincreaseinrecessionsanddeclineintoalatecyclebackdropduetosupportivemacroconditions.ThusS&P500ShillerP/Esusuallyincreasewhenmovinglatecycle(Exhibit16).Thisiswhenequitiesoftenmovetothe‘optimismphase’andaremoredrivingbyvaluationsthanearningsgrowth-wethinkequitieshavelikelyenteredinthisphase.Equityvaluationsgotanadditionalboostfromfallinginflationand

expectationsforpolicyeasing-S&P500ShillerP/Esareinverselylinkedtoourinflationscore(Exhibit17).Highinflationtendstoforcecentralbankstotightenpolicyanddrivedeleveragingbutalsobecauseprofitmarginscancomeunderpressure.

Exhibit16:Equityvaluationstendtobehigherlatecycle

Orangedotdenoteslastdatapoint

S&P500ShillerP/E

50

45

40

35

30

25

20

15

10

5

0

-2.50

-2.00

-1.50-1.00-0.500.000.501.001.50USgrowthscore(higher=morelatecycle)

2.00

Exhibit17:Lowerinflationtendstoboostequityvaluations

Orangedotdenoteslastdatapoint

S&P500ShillerP/E

50

45

40

35

30

25

20

15

10

5

0

-2.50

-1.50

-0.500.501.502.503.504.50USinflationscore(higher=higherinflation)

5.50

Source:HaverAnalytics,Bloomberg,Datastream,GoldmanSachsGlobalInvestmentResearchSource:HaverAnalytics,Bloomberg,Datastream,GoldmanSachsGlobalInvestmentResearch

Onlyifthereisalargeequitybubble,valuationmeanreversionismoreofarisk.

However,whileS&P500ShillerP/Esareelevated,trailingP/Esarelessso(Exhibit18)-if(real)earningsdonotdeclinematerially,i.e.meanrevert,cyclicallyadjustedequity

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valuationsaresendingatoobearishsignal.Non-USequityvaluationsareneartheir

averagesincethe1990s.AndUSequityvaluationsarelowerexcludingTechstocks,

whosehighervaluationsreflectstrongprofitability,growthprospectsandbalancesheetstrengthaswellasprospectivetailwindsfromAI.Globalequityindicesalsohavea

largerweightinqualitygrowthstocksaftermultipleyearsofoutperformance.

Long-termS&P500growthexpectationshavepickedupmaterially,inpartduetotheoptimismonthegrowthimpactofAI-thesamewastrueinthe1960sand

1990s,whenproductivitygrowthincreasedandwashighforseveralyears.Basedonasingle-stagedividenddiscountmodel,S&P500LTimpliedrealgrowthnear4.5%iswellaboveitsaverageof2.6%since1950(Exhibit17).Assumingthesamepayoutratios

since1900(alotofUStechstocksdonotpaydividends)resultsinlowerimpliedrealgrowthof3.7%.ThisremainswellbelowTechbubblepeaks-wedonotthinkAIhasalreadydrivenastockbubble.

Exhibit18:Non-cyclicallyadjustedequityvaluationsex“Magnificient7”andoutsidetheUSarelesselevated

TrailingP/E(datasince1973)

35

33.1

InterquartileRangeMedian

30

Current

10th-90thpercentile

25

24.9

21.2

20

18.2

15.1

15

13.7

14.3

14.0