(Bloomberg) — High valuations won’t be a barrier to increased stock allocations next year due to a lack of alternatives and big cash piles, according to Goldman Sachs Group Inc.

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Record allocations by households, foreign investors, mutual and pension funds are set to climb even higher in 2022, Goldman strategists led by David Kostin wrote in a note Friday. This belies the argument that stocks have reached unsustainable heights, with Bank of America Corp. recently saying valuations have accelerated to “extremes.”

Goldman’s gung-ho view on stocks comes amid growing expectations that the Federal Reserve will hike interest rates faster and more aggressively starting toward the end of next year. It sees the 10-year Treasury yield rising to 1.8% in 12 months, and expects both investment-grade and high-yield bond spreads to widen — which the bank’s strategists say will make them unappealing to investors.

Equity allocations, already at an all-time high of 52%, are on the rise because cash yields are near zero and households own half of the $28 trillion of U.S. cash assets, the strategists wrote.

“Fixed-income alternatives to equities appear unattractive on an absolute and historical basis,” Goldman says.

Goldman expects companies to have $350 billion of net demand for stocks next year due to record buyback authorizations and strong merger-and-acquisition activity. Households and foreign investors will be net buyers of $300 billion, and mutual and pension funds will sell a net $400 billion, it said.

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