Goldman Sachs said diversification and risk management is going to be “critical” in 2024 as it encouraged investors to “expect the unexpected” next year.
The bank identified three key themes for the anticipated “fluid” investment landscape in 2024: geopolitical volatility, sustainability, security and defence.
Goldman said artificial intelligence (AI) is an obvious driver of growth moving forward but singled out the healthcare and drug development sectors as the key areas to watch.
It also predicted that AI would likely lead to substantial productivity gains in a variety of sectors in 2024, suggesting that AI may drive productivity gains equivalent to those seen way back with the introduction of electricity and more recently with the introduction of the personal computer.
Ashish Shah, Goldman’s chief investment officer of public investing, cautioned however that the rise of AI would likely lead to “new capabilities on the part of bad actors” which will in turn necessitate the development of “new defences”.
When asked what the most underrated investment risks were as we head into 2024, Alexandra Wilson-Elizondo, head of multi-asset funds and model portfolio management at Goldman, warned that investors should be cautious around consensus opinion that the US will succeed in a soft landing.
Though Goldman believe that the US sticking a soft landing will be the most likely scenario, Wilson-Elizondo argued that it would always be wise for investors to consider challenging the status quo, adding that she was “very mindful” of the accruing impacts of rising interest rates.
The eagerly sought after soft landing would see the US Federal Reserve using higher interest rates to ease price pressures without causing the world’s largest economy to contract or causing a big rise in unemployment in the nation.