Wednesday, 9 May 2012

Goldman Sachs: Stocks Have Been A Better Risk-Adjusted Investment Than Housing Since 1890

Portugal_real_estate

http://www.businessinsider.com/goldman-sachs-houses-vs-stocks-who-wins-the-long-run-sharpe-race-2012-5? 
'Goldman Sachs has been producing a lot of bullish equity research, despite chief U.S. equity strategist David Kostin's bearish view on stocks.  Last month, Goldman's Peter Oppenheimer published a massive report titled The Long Good Buy that argued stocks were insanely cheap relative to bonds.

In a new report today title Houses vs. Stocks: Who Wins the Long-Run ‘Sharpe’ Race?, Goldman's Jose Ursua argues that stocks are way better than housing on both an absolute returns basis and risk-adjusted returns basis.

One of the most common risk-adjusted returns measures is the Sharpe ratio.  Simply put, it's the excess returns divided by the standard deviation of excess returns. For long-term investments like housing or stocks, Ursua argues "What matters are risk-reward tradeoffs."

Here's a summary of his report...'

Read more: http://www.businessinsider.com/goldman-sachs-houses-vs-stocks-who-wins-the-long-run-sharpe-race-2012-5?#ixzz1uM3g7H00

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