Goldman Sachs analysts believe that the stock market is entering a new postmodern investment cycle. "We are entering a new 'Postmodern' cycle in which inflation is a bigger risk than deflation. We are also likely to see greater regionalization, more expensive labor and commodities, larger and more active governments," the bank pinpointed in its report.
The new investment cycle is likely to be driven by various economic conditions and priorities, creating new investment opportunities. "The focus will shift to companies that are “adapters” and can easily adjust their business models, as well as “enablers” and “innovators” who reduce energy and labor costs," Goldman strategists pointed out.
In addition, market participants will add shares of those companies to their portfolios that are beneficiaries of higher government spending. "Many of the companies that are most sensitive to these themes have de-rated in recent months and offer reasonable prices as well as attractive growth opportunities," the bank noted.