Morningstar | Analyzing the Rally

Morningstar had an interesting article today analyzing the rally since 10/3.  I pulled the following chart from the article.

Goldman Sachs | Conviction Buy List update 5.20.11

Below you will see updated results of my Goldman Sachs Conviction Buy List tracker along with several other portfolios and ETF's for comparison.  It is kind of scary how well this has performed.  I'm not sure if there are tracking errors or issues.  I'd be curious to see what others have found by tracking Goldman's picks.  I highly doubt this performance can persist but we will see.

	Performance since 4.9.10
Goldman Conviction Buy	43.82%
Vanguard Total World ETF	9.39%
SPY ETF	11.76%
Global 60/40 Fama French Portfolio	6.17%
Basic 60/40 Global Portfolio	6.87%
EEM ETF	7.51%
BKF ETF	-2.58%

GOLDMAN SEES S&P 500 GAINING 18%

(Bloomberg News) Goldman Sachs Group Inc., Wall Street’s most profitable investment bank, predicts the Standard & Poor’s 500 Index will rally 18% to 1,500 by the end of December and Treasuries will have a “decent” year.

“We have a very out-of-consensus view for how much the economy can grow before this growth generates higher inflation and interest rates,” Jan Hatzius, the company’s New York-based chief U.S. economist, wrote in a report he distributed by e-mail yesterday. “If we’re right, the likely implication is a decent environment for the Treasury bond market and a very good environment for the equity market.”

The S&P 500 has climbed 12% over the past year, rising to the highest level since Lehman Brothers Holdings Inc.’s bankruptcy in September 2008 as Fed Chairman Ben S. Bernanke pumps $600 billion into the economy and President Barack Obama extends tax cuts. An advance to 1,500 would result in a 19% gain for the year. The index has only risen that much twice in the past decade, gaining 23% in 2009 and 26% in 2003.

U.S. three-month bill rates will average 0.2% in 2011 and 0.3% in 2012, the report said, compared with 0.14% today. Ten-year Treasury yields will rise to 3.75% by Dec. 31 from 3.35 percent now, according to Goldman, which is one of the 18 primary dealers that are authorized to trade directly with the Federal Reserve.

The world’s biggest economy will expand 3.4% this year, the report said, quickening from 2.6% in the third quarter of 2010, which are the most recent figures available.

The U.S. consumer price index will increase 1.7%, Goldman predicts, versus 1.1% that the government reported for November from a year earlier.

Low inflation helps preserve the value of a bond’s fixed payments. Ten-year real rates, what investors get after accounting for costs in the economy, have doubled over the past year to 2.24%.

Today’s report reiterated forecasts for the S&P 500 and 10- year yields that Goldman Sachs issued at the end of 2010 and earlier this year.

Model performance update

	Performance since 4.9.10	Alpha
Goldman Sachs Conviction Buy List	11.8%	7.0%
Fama French 60/40 ETF Portfolio	2.6%	-1.5%
SPDR S&P 500 ETF	4.8%
Vanguard World ETF	5.8%
iShares Agg Bond ETF	1.6%
60/40 Basic Portfolio	4.1%

Goldman Sachs Conviction Buy List Tracker Update

Here is an update on my Goldman Sachs (GS) Conviction Buy List tracker.  This is actually pretty impressive performance especially considering the methods this tracker uses are not at all precise.

GSConviction4.9.10_GainLoss