European equity markets carry a reputation they may not deserve. Goldman Sachs is challenging that consensus directly, arguing that common assumptions about European stocks amount to myths and that the region has been a secret outperformer that allocation flows have largely ignored.
The problem Goldman Sachs is addressing starts with visibility. European markets fly under the radar compared to U.S. exchanges, and the gap is structural. U.S. markets are larger and more liquid. Against that backdrop, Goldman Sachs describes European equities as "unloved" and positions the region as a case where the conventional wisdom has overshot what the performance record actually shows.
Where the counterargument holds
The liquidity objection is real and Goldman Sachs cannot argue it away. Investors operating at scale face wider spreads and less flexible exits in European markets than in U.S. ones, and those friction costs matter when a position is large enough. A return figure that looks compelling in isolation looks different once the cost of entry and exit at size is factored in. The risk is that "unloved" understates a genuine structural disadvantage rather than simply describing a perception problem.
On balance, Goldman Sachs's case is that European equity performance has been obscured by reputation rather than invalidated by fundamentals. Whether that outperformance survives a full accounting of liquidity costs is the line to watch.