Sharmin Mossavar-Rahmani: Long US stocks Amid Volatility

Retirement and Role Transition

• Sharmeen Mosabar-Rahmani will retire at the end of the year after 33 years as a partner at Goldman Sachs.
• She served as Head of the Investment Strategy Group and Chief Investment Officer of Wealth Management, overseeing strategic and tactical asset allocation.

Structural Market Evolution

• The number of U.S. Exchange Traded Funds (ETFs) has exceeded 5,000, with a global total surpassing 10,000.
• The U.S. market now hosts over 30,000 Registered Investment Advisers (RIAs).
• Market complexity has increased significantly due to the proliferation of derivatives, derivatives-on-derivatives, and a larger volume of hedge fund participants.
• Core investment principles remain unchanged since 1993: success requires rigorous analysis, a solid framework, and a focus on facts.

Asset Allocation Strategy and Long-Term Bias

• Goldman Sachs has maintained an unequivocal bias toward long U.S. equities based on the "US preeminence" thesis.
• Backed by the view that economic growth and earnings in the U.S. are upward trending, the firm advises against market timing, particularly for tax-sensitive investors.
• Data indicates U.S. economic expansions are lengthening while recession durations are shortening, supporting a "stay invested" approach.
• Performance Highlight (March 2009): A $100 million investment in the S&P 500 at the peak of the Global Financial Crisis grew to approximately $1.5 billion; the same amount invested in China would have grown to roughly $20 billion (20% of the U.S. result).

Investment Framework and Methodology

• The firm utilizes a framework comprising over 110 investment strategists across global offices, from Hong Kong to California.
• The approach integrates bottom-up and top-down analysis, including quantitative models and technical analysis.
• Artificial Intelligence (AI): The firm evaluates AI through both macroeconomic absorption rates (Jan Hatzius team) and bottom-up corporate profitability models for hyperscalers (Jim Covello team).
• Technical Analysis: The firm explicitly incorporates market technicals into its decision-making process alongside fundamentals.
• The strategy emphasizes leveraging the long investment horizons of private wealth clients, which provides a distinct advantage over hedge funds, mutual funds, and pension plans.

Geopolitical Risk Assessment

• Geopolitical events (e.g., Russia-Ukraine, Iran) are viewed as temporary disruptions that will eventually pass, though the timing remains uncertain.
• The U.S. economy is less vulnerable to energy shocks today than in the 1970s due to increased energy efficiency and domestic production (U.S. oil production is double that of Saudi Arabia; LNG exports exceed Qatar's).
• The firm distinguishes between the horrific human toll of conflicts and their actual impact on U.S. earnings power and equity markets.

Operational Philosophy

• Success relies on rigorous fact-checking to avoid biased presentations (e.g., correcting incomplete inflation data that ignores wage/rent components).
• The firm employs a team of "A-plus" players and leverages the firm's global footprint to maintain exceptional performance.
• Sharmeen's career playbook remains consistent: exceptional performance requires extra hard work and rigorous analytical standards.