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Goldman Sachs chief U.S. equity strategist David Kostin joined CNBC's "Squawk on the Street" on Tuesday to discuss the market's current valuation.
"Basically, all of the good and optimistic outlook is basically priced into the market today," said Kostin. "So where the market's trading now, I would say the asymmetry of upside [is] perhaps 2%, the downside maybe 15%."
The market is trading at around a 17-times multiple on Goldman's optimistic, or best case, 2021 earnings estimate for next year of about $170 per share, said Kostin.
"So to put that in some perspective, last year, 2019, the market earned $165, and my forecast for next year in 2021, looking through the trough this year, will be about $170, so that's actually a slightly higher level than we had before. In that context, the market is trading on a two year forward basis, on a very high multiple," said Kostin.
"The risk of activity and developments going forward, as I think about it, is probably more skewed to the downside in the near-term than the upside," Kostin added. "Its certainty not giving a lot of cushion for portfolio managers."
Kostin also discussed the danger of investors of looking through all the downside risk.