Outlook Investment Management Division Half Full “ Everything we hear is an opinion, not a fact. Everything we see is a perspective…” Attributed to Marcus Aurelius Investment Strategy Group | January 2017 Sharmin Mossavar-Rahmani Chief Investment Officer Investment Strategy Group Goldman Sachs Brett Nelson Head of Tactical Asset Allocation Investment Strategy Group Goldman Sachs Additional Contributors from the Investment Strategy Group: Matthew Weir Managing Director Maziar Minovi Managing Director Angel Ubide Managing Director Farshid Asl Managing Director Matheus Dibo Vice President Mary Catherine Rich Vice President This material represents the views of the Investment Strategy Group in the Investment Management Division of Goldman Sachs. It is not a product of Goldman Sachs Global Investment Research. The views and opinions expressed herein may differ from those expressed by other groups of Goldman Sachs. 2017 OUTLOOK Dear Clients, Readers of our previous Outlook publications may recall that this page typically summarizes the key themes of our economic and financial market prospects for the coming year. However, for 2017 we decided that a brief overview would not suffice, given the current environment of high market valuations, great policy uncertainty, significant geopolitical tensions and, in all likelihood, an unconventional US presidency. Since the trough of the global financial crisis, we have consistently emphasized US preeminence and maintained a strategic overweight to US equities relative to global market capitalization-weighted benchmarks. Tactically, we have had an overweight allocation to US equities and US high yield bonds from as early as mid-2008. Even when US equities became more expensive, we continued to recommend that clients stay fully invested at their strategic allocations. Indeed, we have reiterated that recommendation in our past Outlook publications, client calls and Sunday Night Insight reports as many as 59 times since January 2010. B