Most 2019 S&P 500 forecasts were too low

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Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Most 2019 S&P 500 forecasts were too low

Post by oldcomputerguy »

Side note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number, some by more than others obviously.

https://www.lostoak.com/ls/diehards/con ... fault.aspx

Interestingly, Binky Chadha of Deutsch Bank ended up in fourth place and Keith Parker of UBS ended in seventh.
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Re: Most 2019 S&P 500 forecasts were too low

Post by bloom2708 »

I missed low by 526 points for 2019. I'll stick to my dad j*b.

If I'm going to miss for 2020, I want it to be the same way. I pick a number and the S&P 500 trounces it. :wink: :moneybag
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Re: Most 2019 S&P 500 forecasts were too low

Post by Steve Reading »

willthrill81 wrote: Tue Dec 31, 2019 4:45 pm In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I wonder if places like Morgan Stanley short the market based on predictions like these (since their prediction was for a closing that was actually lower than it start with).

If so, that’d be a fair amount of money lost :/
"... so high a present discounted value of wealth, it is only prudent for him to put more into common stocks compared to his present tangible wealth, borrowing if necessary" - Paul Samuelson
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Re: Most 2019 S&P 500 forecasts were too low

Post by rbaldini »

If it were me, I'd always guess the average historical market return of about 10%. That means I'll usually be pretty far off, but it's probably still a better estimate, on average, than many others. When the signal:noise ratio is very high, usually the simplest methods do the best.
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Re: Most 2019 S&P 500 forecasts were too low

Post by goblue100 »

305pelusa wrote: Tue Dec 31, 2019 5:19 pm
willthrill81 wrote: Tue Dec 31, 2019 4:45 pm In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I wonder if places like Morgan Stanley short the market based on predictions like these (since their prediction was for a closing that was actually lower than it start with).

If so, that’d be a fair amount of money lost :/
I see Morgan Stanley as being mildly optimistic. On January 1, 2019, the S&P 500 Index was 2506.85.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
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Re: Most 2019 S&P 500 forecasts were too low

Post by Steve Reading »

goblue100 wrote: Tue Dec 31, 2019 5:27 pm
305pelusa wrote: Tue Dec 31, 2019 5:19 pm
willthrill81 wrote: Tue Dec 31, 2019 4:45 pm In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I wonder if places like Morgan Stanley short the market based on predictions like these (since their prediction was for a closing that was actually lower than it start with).

If so, that’d be a fair amount of money lost :/
I see Morgan Stanley as being mildly optimistic. On January 1, 2019, the S&P 500 Index was 2506.85.
I assumed these predictions were made right before December when all Market Outlooks came out.

When I look at the article, I read that Morgan’s prediction comes from Wilson, who has Bearish and expected “no change”. So the prediction must’ve been made close to when the index was at 2750.
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Re: Most 2019 S&P 500 forecasts were too low

Post by bhsince87 »

And none of them were even close on the PE, which is 24.2 today.
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Re: Most 2019 S&P 500 forecasts were too low

Post by abracadabra11 »

willthrill81 wrote: Tue Dec 31, 2019 4:45 pm The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I actually see this as reinforcing the idea of crowd wisdom. In aggregate, their mean prediction was within about 5% of the actual closing value. That's pretty good in my book.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Triple digit golfer »

oldcomputerguy wrote: Tue Dec 31, 2019 4:55 pmSide note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number...
I see several guesses over the final number, many in the 3300s
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

I could not guess it from one year ago with the Bogleheads contest.

Stay the course with a simple S&P 500 fund. Thank you Warren Buffett.
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Re: Most 2019 S&P 500 forecasts were too low

Post by oldcomputerguy »

Triple digit golfer wrote: Tue Dec 31, 2019 5:51 pm
oldcomputerguy wrote: Tue Dec 31, 2019 4:55 pmSide note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number...
I see several guesses over the final number, many in the 3300s
Sorry, I stand corrected. :oops:
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Re: Most 2019 S&P 500 forecasts were too low

Post by Triple digit golfer »

oldcomputerguy wrote: Tue Dec 31, 2019 5:57 pm
Triple digit golfer wrote: Tue Dec 31, 2019 5:51 pm
oldcomputerguy wrote: Tue Dec 31, 2019 4:55 pmSide note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number...
I see several guesses over the final number, many in the 3300s
Sorry, I stand corrected. :oops:
:sharebeer

I see how you made the mistake, though. Looking through the list isn't intuitive because the list, rightfully so, is sorted by absolute value from the ending number, so the guesses are scattered about.
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Re: Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

abracadabra11 wrote: Tue Dec 31, 2019 5:41 pm
willthrill81 wrote: Tue Dec 31, 2019 4:45 pm The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I actually see this as reinforcing the idea of crowd wisdom. In aggregate, their mean prediction was within about 5% of the actual closing value. That's pretty good in my book.
Until you look at the average estimate from the Bogleheads contest, which was 2613.71 for 632 participants, and that included several guesses that were over 10,000. The experts came a lot closer than the average BH. Maybe the experts really do know more than the average bear, pun intended? :P
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

oldcomputerguy wrote: Tue Dec 31, 2019 5:57 pm
Triple digit golfer wrote: Tue Dec 31, 2019 5:51 pm
oldcomputerguy wrote: Tue Dec 31, 2019 4:55 pmSide note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number...
I see several guesses over the final number, many in the 3300s
Sorry, I stand corrected. :oops:
What will 2020 bring?
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Re: Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

abuss368 wrote: Tue Dec 31, 2019 6:05 pm
oldcomputerguy wrote: Tue Dec 31, 2019 5:57 pm
Triple digit golfer wrote: Tue Dec 31, 2019 5:51 pm
oldcomputerguy wrote: Tue Dec 31, 2019 4:55 pmSide note, I just took a look at the final standings for the 2019 Bogleheads Contest, and except for four entries that were in the tens of thousands, every entry in the contest under-guessed the index's final number...
I see several guesses over the final number, many in the 3300s
Sorry, I stand corrected. :oops:
What will 2020 bring?
Stocks will finish higher or lower than this year.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

I am going long on Total Stock and doubling down with SDS.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Artsdoctor »

I actually did not realize that any respectable analyst would make a 1-year prediction! Aren’t these numbers known to be wildly off much of the time? Most analysts use 10-year periods to open the conversation.
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Re: Most 2019 S&P 500 forecasts were too low

Post by RJC »

Did Vanguard make any forecasts for 2019?
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Re: Most 2019 S&P 500 forecasts were too low

Post by 1789 »

willthrill81 wrote: Tue Dec 31, 2019 5:59 pm
abracadabra11 wrote: Tue Dec 31, 2019 5:41 pm
willthrill81 wrote: Tue Dec 31, 2019 4:45 pm The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
I actually see this as reinforcing the idea of crowd wisdom. In aggregate, their mean prediction was within about 5% of the actual closing value. That's pretty good in my book.
Until you look at the average estimate from the Bogleheads contest, which was 2613.71 for 632 participants, and that included several guesses that were over 10,000. The experts came a lot closer than the average BH. Maybe the experts really do know more than the average bear, pun intended? :P
Same thing i noticed. I think they have slight edge over average forum member :twisted:
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

Their crystal ball is no better than anyone else's.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Trader Joe »

willthrill81 wrote: Tue Dec 31, 2019 4:45 pm In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
Thank you very much for posting this information, Yes, of course. No one can predict the future. No one. This includes representatives from Vanguard, etc.

I always (and only) invest in broad U.S. Stock Market Index Funds (VFIAX or VTSAX).

I am very happy with my investment results.
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Re: Most 2019 S&P 500 forecasts were too low

Post by bck63 »

bhsince87 wrote: Tue Dec 31, 2019 5:35 pm And none of them were even close on the PE, which is 24.2 today.
Looking at this chart is a bit shocking:

https://www.multpl.com/s-p-500-pe-ratio

There have been very few times in history that the PE ratio has been this high. Surely that must tell us something? Or no? I don't know the answer to that question. I personally have taken some risk off the table.
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Re: Most 2019 S&P 500 forecasts were too low

Post by stocknoob4111 »

now that all these experts have got 2019 wrong they have confidently started making predictions about 2020 😀

PE ratios are high but interest rates are at historic lows as well.
Last edited by stocknoob4111 on Tue Dec 31, 2019 8:20 pm, edited 1 time in total.
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Re: Most 2019 S&P 500 forecasts were too low

Post by mortfree »

Some of those high numbers tens of thousands were for the Dow (confusion).

Sally would have nailed that contest.

I went real low (reverse psychology)
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Re: Most 2019 S&P 500 forecasts were too low

Post by Crushtheturtle »

What does Keith think now?
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Barry Barnitz's Boglehead Contest Financial Page

Post by Taylor Larimore »

Bogleheads:

Barry Barnitz's Financial Page has compiled interesting statistics from prior Boglehead Contests here:

Boglehead Contest Financial Page

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Re: Most 2019 S&P 500 forecasts were too low

Post by AlohaJoe »

bck63 wrote: Tue Dec 31, 2019 7:55 pm
bhsince87 wrote: Tue Dec 31, 2019 5:35 pm And none of them were even close on the PE, which is 24.2 today.
Looking at this chart is a bit shocking:

https://www.multpl.com/s-p-500-pe-ratio

There have been very few times in history that the PE ratio has been this high. Surely that must tell us something?
It tells us that earnings are going to increase.

(Why can't that be the answer? Why is it always "price must go down"?)
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Re: Most 2019 S&P 500 forecasts were too low

Post by Crushtheturtle »

It could also mean "Hey look guys! I made a chart that falsely presumes reversion to some mean!"
If you're not having fun, you'll just have to pretend.
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Re: Most 2019 S&P 500 forecasts were too low

Post by bhsince87 »

AlohaJoe wrote: Tue Dec 31, 2019 9:02 pm
bck63 wrote: Tue Dec 31, 2019 7:55 pm
bhsince87 wrote: Tue Dec 31, 2019 5:35 pm And none of them were even close on the PE, which is 24.2 today.
Looking at this chart is a bit shocking:

https://www.multpl.com/s-p-500-pe-ratio

There have been very few times in history that the PE ratio has been this high. Surely that must tell us something?


It tells us that earnings are going to increase.

(Why can't that be the answer? Why is it always "price must go down"?)
That WAS the answer around 2009, when that chart was at an all time high. That was a wonderful time to invest in stocks.
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Re: Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

abuss368 wrote: Tue Dec 31, 2019 7:40 pm Their crystal ball is no better than anyone else's.
Perhaps, but their average forecast was much closer to the truth than the average participant in the BH contest.
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Triple digit golfer »

abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
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Re: Most 2019 S&P 500 forecasts were too low

Post by eye.surgeon »

willthrill81 wrote: Tue Dec 31, 2019 4:45 pm In December of 2018, Sam Dogen (the Financial Samurai) compiled the predictions of various 'experts' on where the S&P 500 would close at the end of 2019.

Image

The actual closing price was 3,230.78.

The closest estimate was the second most bullish one, put forward by Keith Parker of UBS.

I put this forward only to show that seven of the eight estimates undershot the S&P 500's closing value for the year, four of them by more than 7%.

The mean estimated closing value was 3,056.25, which was still well below the actual closing value. So much for the wisdom of this crowd.

"It's difficult to make predictions, especially about the future."
- Danish proverb
If there's any moral to this story it's that the groupthink idea that is pretty much accepted as gospel that future returns over the next decade will be a real 4% or less mean nothing. Even the most informed prognosticators have NO idea.
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Re: Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

eye.surgeon wrote: Tue Dec 31, 2019 10:25 pm If there's any moral to this story it's that the groupthink idea that is pretty much accepted as gospel that future returns over the next decade will be a real 4% or less mean nothing. Even the most informed prognosticators have NO idea.
I'm inclined to agree. Dogen basically accused Jonathan Golub of smoking marijuana for coming up with such a 'high' forecast, but his was the second closest of the eight forecasts.

Even Bogle himself was fairly notorious for undershooting stocks' actual returns.
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm
abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
Indeed. When I think back....
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Re: Most 2019 S&P 500 forecasts were too low

Post by Stinky »

Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm
abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
Acronym check -

What is SDS?
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Re: Most 2019 S&P 500 forecasts were too low

Post by lazyday »

bck63 wrote: Tue Dec 31, 2019 7:55 pmThere have been very few times in history that the PE ratio has been this high. Surely that must tell us something? Or no? I don't know the answer to that question. I personally have taken some risk off the table.
It tells me to not put 100% of my money in the US.

Risk seems high, but I’m skeptical of the answer to cut back. I’m not certain it’s wrong to be fearful when others are greedy, and cut back when markets are expensive. But I don’t do it myself, and suspect that most people just hurt themselves with market timing.
abuss368 wrote: Tue Dec 31, 2019 5:54 pmStay the course with a simple S&P 500 fund. Thank you Warren Buffett.

John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."
Elon is much smarter than me, maybe I should put 100% of my money in Tesla?

It’s a bad idea to go 100% Tesla, or 100% Tech sector, or 100% US.

Bogleheads diversify.
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Re: Most 2019 S&P 500 forecasts were too low

Post by lazyday »

Why do people bother with weather forecasts 10 days in the future, when they are so often wrong?

Do forecasters have “NO idea” of the weather in exactly 10 days from now? Or is it impossible to make a reliable forecast, and our prediction is just the best we can do?

Some forecasts are better than a random guess, but still often wrong.

If $1 invested in stocks gets you $0.03 in cyclically adjusted earnings, then we should probably predict lower returns than we would if stocks earned $0.07 per dollar.

Looking at 1 year predictions is something of a straw man. Of course the results are likely to be terrible, just like a 30 day weather forecast. If you want merely bad results instead of terrible, then look at 10 year predictions. I like the predictions from Research Affiliates and from AQR, because they give detailed methodology that makes some sense to me. Or you can just use future returns = current 1/CAPE, nice and easy. Though I’m not sure if it’s appropriate to compare 1/CAPE from EM to US or developed ex-US.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Triple digit golfer »

Stinky wrote: Wed Jan 01, 2020 5:46 am
Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm
abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
Acronym check -

What is SDS?
I had to Google it. Some ETF that is supposed to double the opposite return of the S&P 500 index. If 500 declines 2%, it should increase 4%. Something to that effect.

No thank you!
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Re: Most 2019 S&P 500 forecasts were too low

Post by z3r0c00l »

willthrill81 wrote: Tue Dec 31, 2019 6:07 pm
Stocks will finish higher or lower than this year.
A bold prediction given the third option!
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abuss368
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

Triple digit golfer wrote: Wed Jan 01, 2020 7:11 am
Stinky wrote: Wed Jan 01, 2020 5:46 am
Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm
abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
Acronym check -

What is SDS?
I had to Google it. Some ETF that is supposed to double the opposite return of the S&P 500 index. If 500 declines 2%, it should increase 4%. Something to that effect.

No thank you!
Correct. An inverse on steroids essentially.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: Most 2019 S&P 500 forecasts were too low

Post by Stinky »

abuss368 wrote: Wed Jan 01, 2020 9:00 am
Triple digit golfer wrote: Wed Jan 01, 2020 7:11 am
Stinky wrote: Wed Jan 01, 2020 5:46 am
Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm
abuss368 wrote: Tue Dec 31, 2019 10:20 pm In our evil stock picking days when we thought the S&P 500 was going down we speculated with SDS.
The thought of that makes me cringe. Thank God you saw the light!
Acronym check -

What is SDS?
I had to Google it. Some ETF that is supposed to double the opposite return of the S&P 500 index. If 500 declines 2%, it should increase 4%. Something to that effect.

No thank you!
Correct. An inverse on steroids essentially.
This sounds like something the “old Stinky”’might have considered if he was “convinced” that the market was going to fall.

“Old Stinky” lived in the days BB. (That is, before Bogleheads)
It's a GREAT day to be alive - Travis Tritt
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Re: Most 2019 S&P 500 forecasts were too low

Post by Helo80 »

Yup --- Seeing lots of stuff happen that many said should not or would not happen. I remember reading a late-night editorial from Nobel Prize winning Economist Paul Krugman from the New York Times about the economic despair that we should be in now.... has not happened. The last 3 years of the market have been spectacular.
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Re: Most 2019 S&P 500 forecasts were too low

Post by Triple digit golfer »

Helo80 wrote: Wed Jan 01, 2020 9:38 am Yup --- Seeing lots of stuff happen that many said should not or would not happen. I remember reading a late-night editorial from Nobel Prize winning Economist Paul Krugman from the New York Times about the economic despair that we should be in now.... has not happened. The last 3 years of the market have been spectacular.
So NOW is the time to sell stocks and wait for the crash? :wink:
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Re: Most 2019 S&P 500 forecasts were too low

Post by abuss368 »

Stinky wrote: Wed Jan 01, 2020 9:06 am
abuss368 wrote: Wed Jan 01, 2020 9:00 am
Triple digit golfer wrote: Wed Jan 01, 2020 7:11 am
Stinky wrote: Wed Jan 01, 2020 5:46 am
Triple digit golfer wrote: Tue Dec 31, 2019 10:23 pm

The thought of that makes me cringe. Thank God you saw the light!
Acronym check -

What is SDS?
I had to Google it. Some ETF that is supposed to double the opposite return of the S&P 500 index. If 500 declines 2%, it should increase 4%. Something to that effect.

No thank you!
Correct. An inverse on steroids essentially.
This sounds like something the “old Stinky”’might have considered if he was “convinced” that the market was going to fall.

“Old Stinky” lived in the days BB. (That is, before Bogleheads)
Yeah they were crazy stock picking days for sure!
John C. Bogle: “Simplicity is the master key to financial success."
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willthrill81
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Re: Most 2019 S&P 500 forecasts were too low

Post by willthrill81 »

Triple digit golfer wrote: Wed Jan 01, 2020 9:45 am
Helo80 wrote: Wed Jan 01, 2020 9:38 am Yup --- Seeing lots of stuff happen that many said should not or would not happen. I remember reading a late-night editorial from Nobel Prize winning Economist Paul Krugman from the New York Times about the economic despair that we should be in now.... has not happened. The last 3 years of the market have been spectacular.
So NOW is the time to sell stocks and wait for the crash? :wink:
A broken clock is right twice a day (unless it's digital).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Most 2019 S&P 500 forecasts were too low

Post by MotoTrojan »

lazyday wrote: Wed Jan 01, 2020 7:00 am Why do people bother with weather forecasts 10 days in the future, when they are so often wrong?

Do forecasters have “NO idea” of the weather in exactly 10 days from now? Or is it impossible to make a reliable forecast, and our prediction is just the best we can do?

Some forecasts are better than a random guess, but still often wrong.

If $1 invested in stocks gets you $0.03 in cyclically adjusted earnings, then we should probably predict lower returns than we would if stocks earned $0.07 per dollar.

Looking at 1 year predictions is something of a straw man. Of course the results are likely to be terrible, just like a 30 day weather forecast. If you want merely bad results instead of terrible, then look at 10 year predictions. I like the predictions from Research Affiliates and from AQR, because they give detailed methodology that makes some sense to me. Or you can just use future returns = current 1/CAPE, nice and easy. Though I’m not sure if it’s appropriate to compare 1/CAPE from EM to US or developed ex-US.
I want to trust the Research Affiliates data; they show a significant expected outperformance on several fundamental indices I hold. Hmm, who developed those indices again...?
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Re: Most 2019 S&P 500 forecasts were too low

Post by Helo80 »

Triple digit golfer wrote: Wed Jan 01, 2020 9:45 am So NOW is the time to sell stocks and wait for the crash? :wink:

I'm still waiting for this crash and trade war to happen. I am waiting for this prolonged recession. /s

If you need the money for a car/house/trip soon --- sell. If you don't, keep it in VTSAX or VFIAX. I'm 100% equities, and I won't change that anytime soon. JL Collins philosophy/blog roughly matches my thoughts and humor.

Though, like you, I can enjoy a fine 3-digit golf game as well! :sharebeer
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Re: Most 2019 S&P 500 forecasts were too low

Post by mighty72 »

looking at https://www.bogleheads.org/blog/boglehead-contest-2/, my guess about the guesses is that next this year forecasts will be too high
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