Goldman Sachs CEO David Solomon says he expects lower returns on equities over the next few years

Investors should not expect the bull run in equities and other assets to continue at current levels, according to Goldman Sachs CEO David Solomon.

Equities are on track to enjoy double-digit returns for three consecutive years, measured by the S&P 500, thanks in part to the extraordinary support of the Federal Reserve and other central banks at the start of the coronavirus pandemic. That boom has spread to other assets, including real estate, art and cryptocurrencies.

“We do not expect to see the same return on equities and many other assets over the next few years as we have seen in the last couple of years,”[ads1]; Solomon said Tuesday in response to a question from Joe Kernen on CNBC’s Squawk Box ».

“I do not believe that double-digit equity returns put together forever is something you should expect as an investor,” Solomon said. “I have been involved in a number of investment committees and charities, college boards, etc, and my thinking is absolutely that the returns we have received over the last three to five years are different than what we should expect as we move forward.”

Solomon, who heads one of the world’s leading global investment banks, was asked to weigh a range of topics from inflation to bitcoin, China and return to office work.

While banks have recovered from concerns last year that the pandemic would shrink revenues, Solomon said he still felt Goldman shares were relatively undervalued. Goldman shares have risen around 48% this year.

“Like any other CEO, you know, I think my company and my stock are undervalued and undervalued,” Solomon said. “I think the earnings power of the traditional financial services sector is quite strong, and we get very, very low multiples on these earnings.”

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