(Bloomberg) -- Investors lulled by the long bull market are being motivated more by a search for yield than concern a correction is coming, according to Goldman Sachs Group Inc. President David Solomon.
“We're down the road in the cycle, so there's certainly places where people are further along the greed spectrum than the fear spectrum,” Solomon said Monday in an interview on Bloomberg Television. “In an environment where money has been so inexpensive for such a long period of time, there's no question that people have been reaching for yield.”
U.S. stocks have almost tripled in the past nine years, while the Federal Reserve has kept interest rates near all-time lows. As policy makers start to boost rates, Solomon said such cycles of monetary-policy tightening have rarely been smooth.
History shows “markets reprice more abruptly than people expect,” he said.
While he said it was hard to predict the timing of any correction, Solomon said he sees signs of greed, not just in the bond market but in some stock valuations.
“People have been reaching for growth, and if you look at a bunch of these growthy companies and the value that people will pay for forward growth has been very high,” he said. “At some point that may correct.”
To contact the reporters on this story: Steve Dickson in New York at sdickson1@bloomberg.net, Erik Schatzker in New York at eschatzker@bloomberg.net, Scarlet Fu in New York at scarfu@bloomberg.net.
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Alan Mirabella
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