Leading investment group Goldman Sachs is taking a page from President-elect Donald Trump’s first and best-selling book.
In a new report out Monday titled “2025 U.S. Equity Outlook: The Art of the Deal,” the Goldman authors reference the 1987 book by Trump as a “roadmap” for 2025 strategy recommendations.
“‘The Art of the Deal’ offered readers advice on how to conduct a business negotiation and achieve success as an investor,” Goldman Sachs Research’s David J. Kostin wrote. “The author – who has just been re-hired by the American electorate to be the 47th President of the United States – also provides a roadmap for our 2025 U.S. equity strategy recommendations.
“For the record, we considered using as the subtitle for this report ‘The Art of the Comeback’ in a nod to Trump’s 1997 book by the same title, but the content of the first book is more relevant for portfolio managers.”
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There are five main points that the firm recommends investors keep in mind for next year, inspired by Trump: Think big; maximize your options; low rent, high stakes; deliver the goods; protect the downside and the upside will take care of itself.
“Think big” refers to the Magnificent 7 names, as the report predicts Amazon, Apple, Google, Meta, Microsoft, Nvidia and Tesla to outperform the other S&P stocks in 2025, but at the “slimmest margin” in seven years.
“Astute mutual fund managers have benefited by adhering to Donald Trump’s advice from his #1 bestselling book. He wrote ‘Think Big. I like thinking big. I always have. To me it’s very simple: if you are going to be thinking anyway, you might as well think big,’” Kostin said. “We recommend investors benchmark the Magnificent 7 and seek opportunities in mid-cap equities.”
When maximizing your options, Goldman advises owning a basket of potential merger and acquisition candidates. Sixty-two names picked by the firm “outperformed during Trump’s first term,” leading to their forecast of a 25% year-over-year increase in the number of completed mergers in 2025.
Small and medium-sized businesses shouldn’t be left out of the market equation either, Goldman notes.
“An improving small business operating environment will lift the earnings and valuation of stocks with revenues tied to that spending. We expect business optimism will surge in coming months,” Kostin said under the “low rent, high stakes” section.
“After Donald Trump was elected the 45th President in November 2016, the National Federation of Independent Businesses (NFIB) small business optimism index skyrocketed,” Kostin continued. “It was truly a reflection of ‘animal spirits’ coming to life and this behavior is likely to be repeated now that Donald Trump has been elected to serve as the 47th President.”
Delivering the goods takes a nod at the artificial intelligence (A.I.) revolution, delivering incremental revenues. Goldman adds that the overall economic backdrop in 2025 favors cyclical stocks.
“Everyone agrees with Donald Trump on the importance of results. As he describes it, ‘The dollar always talks in the end.’ Although the book was written 37 years ago, his observation about performance in business is timeless and applies to the current investment environment and the ongoing debate surrounding A.I.,” Kostin said.
The authors ultimately predict the S&P 500 will rise 11% to 6,500 by the year-end of 2025, claiming it’s “in-line with nominal GDP growth.”
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