High volatility is here to stay in 2020. Goldman names 31 stocks to offer the best risk-adjusted returns in turbulent times


The sad stages of 10 million global cases of coronavirus and more than 500,000 deaths, as well as peaks in a number of American states, did not deter investors on Monday.
US stocks climbed early in the session, despite more indications that a second wave may be imminent. Dow Jones industrial average
+ 1.37%

Stock after reports from US regulatory authorities are expected to begin flight testing of the 737 MAX on the ground.

Of the 10 million cases worldwide, more than 2.5 million originate in the United States, according to data from Johns Hopkins University. The U.S. also broke a daily record of new cases on Friday, reporting 44,000 new infections, and lockouts have been reinstated in Texas and Florida.
In our call of the day, Goldman Sachs strategists said high volatility and low risk-adjusted returns are expected to persist in the coming months. After falling 2.9% last week, they expected the S&P 500
+ 0.69% to close the year at 3,000 points – 0.3% lower than its closing price on Friday.

“The consensus is expecting a 9% rise in typical stocks over the next 12 months and volatility is expected to remain high for the rest of the year, suggesting low risk-adjusted returns in the months to come. “
The investment bank’s portfolio strategy research team added 31 stocks to its high Sharpe ratio basket, which is now reaching out to healthcare providers, the media, IT services, and the consumer finance industries. aerospace and defense. The Sharpe ratio measures the return on a risk-adjusted investment, a higher ratio having a more attractive return when the risk is taken into account.
Goldman’s high Sharpe ratio basket has underperformed the S&P 500 by 591 basis points since the start of the year, which the team attributed to its tilt towards value stocks. Historically, the basket has outperformed the S&P 500 over 66% of the six-month periods since 1999 by 271 basis points on average. Basket outperformed index in May and early June as economic data improved and value stocks rebounded, they said, but have lagged since fears of a second wave have intensified.
After the rebalancing, Goldman said the basket offers prospective returns higher than the S&P 500. Western Digital
+ 1.61%

, Merck & Co
+ 1.05%

, Concho Resources
+ 0.83%

, Philip Morris International
+ 2.27%

and Verizon Communications
+ 1.55%

were among the new constituents with the highest expected return to implied volatility over six months. General Motors
+ 2.31%

, Comcast

, Mondelez
+ 1.35%

and Coca-Cola
+ 1.45%

are among the existing members with the highest ratios.
This chart from Fundstrat Global Advisors shows that, despite rising infection rates in the United States and spikes in states like Texas, Arizona, Florida and California, daily deaths in America from COVID- 19 fell to their lowest level since March.

Fundstrat COVID-19 Tracking Project, Ministry of Health

The market
After the Dow Jones closed 730.05 points, or 2.8%, down on Friday, US stocks opened higher on Monday, despite fears of an increase in the number of coronavirus cases. The S&P 500 was up 0.3% but the Nasdaq Composite
+ 0.26%

slipped 0.2% shortly after opening. European stocks were mixed at the start of the trade, with local epidemics in the British city of Leicester and in a Swiss nightclub raising concerns. The Stoxx 600
+ 0.16%

down 0.1%, while the German DAX
+ 0.72%

increased by 0.4%.
Facebook chief executive Mark Zuckerberg wanted to remove an incendiary post from then candidate Donald Trump until 2015, the Washington Post reported on Sunday. Instead, he was convinced to change the platform rules to allow such messages on behalf of political disclosure.
The United States is “unlikely” to develop collective immunity to COVID-19 because of a vaccine that is likely to be partially effective and a large number of people refusing to take it, said Dr. Anthony Fauci, director of the National Institute of Allergies and Infectious Diseases, on Sunday.
Airbnb co-founder and CEO Brian Chesky warned that the trips “will never, never return to the way they were pre-COVID” in an interview with Axios.
Britain’s top civil servant and one of the most powerful people in government, Sir Mark Sedwill, announced his intention to resign on Sunday, as Prime Minister Boris Johnson prepares for an upheaval.
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Her son sails solo across the Atlantic to join his 90-year-old father.
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