Most 2019 S&P 500 forecasts were too low

[nedsaid]

So much winning. The US and International Stock Markets up strongly for the year. Bonds had a great year. The markets are great again. Not tired of winning yet.

[Triple digit golfer]

So NOW is the time to sell stocks and wait for the crash?

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!

On nine holes like me, or is that for 18?

[ohai]

Hi. The suggestion of this thread (the forecasts were "too low") is not fair. Assuming these predictions were made at the end of 2018, those analysts, on average predicted about a 20% gain in SPX, not including dividends. In other words, they were mostly wildly bullish, beyond the average year for SPX. This turned out to be true, and even more so.

[Carol88888]

Does anyone know what the "experts" are predicting this year?

I think I saw it flashed on TV and it looked to me like the predictions were all over the place.

I honestly think anyone of us has as good a chance of getting it right as they do. But that's not saying much.

[Taylor Larimore]

Does anyone know what the "experts" are predicting this year?

I think I saw it flashed on TV and it looked to me like the predictions were all over the place.

I honestly think anyone of us has as good a chance of getting it right as they do. But that's not saying much.

Carol88888:

I anticipate that our programmer, Ralph Aversen, will list the Wall Street Guru "predictions" later.

Happy New Year!
Taylor

Jack Bogle's Words of Wisdom (about predictions): "Nobody knows nothing."

[Carol88888]

Happy New Year to you too, Taylor and all the people on this board who so generously share their knowledge and experience. It really makes a difference.

[abuss368]

So much winning. The US and International Stock Markets up strongly for the year. Bonds had a great year. The markets are great again. Not tired of winning yet.

Ha ha! Too funny!

[AlphaLess]

This is a super interesting post. Thank you for starting it.

So, based on the information presented only in the OP, I think these forecasts were fantastic, for the following reasons:

1. The average forecast came to 3,056.25, while final number was 3,230.78. The closing price for SPX was something like 2,4xx; so predicting a 22.7% increase instead of 29.7% is very very good,

2. When utilizing forecasts, average analyst forecast is just one source. So one would need to use other sources as well, and it is quite possible to improve it,

3. You don't have to stick with your forecast made on Dec 31 2018. Macro conditions changed: FOMC caved in like a tired dog, and trade war seems to show a sign of solution. Conditional on *THOSE*, I am sure that all of those forecasters would have increased their forecasts. Put this another way. They were forecasting for *AVERAGE* scenario. But both FOMC cutting and trade wars subsiding would indicate a *HIGH* scenario,

4. Suppose we consider 3 parallel alternatives: (a) forecast average was 3056 (5.6% short), (b) forecast average was 3230, and (c) forecast average was 3413 (5.6% too high).

WHAT WOULD YOU HAVE DONE differently?

And I am not asking this sarcastically. Suppose you are not a boglehead who practices buy and hold, low-cost investing. Even then, what would you have done?

I could have thought two different things:
- keep holding (when the actual hits the forecast),
- or, be prepared to trade.


Well, the thing with trading is that you always trade with the most recent forecast. So when SPX hits the forecasted number in early Nov of 2019, you would have had many more new forecasts.

So, in short, I think this is a great post, with an extremely flawed conclusion.

[willthrill81]

So, in short, I think this is a great post, with an extremely flawed conclusion.

I didn't even know that the OP had a conclusion, other than most the forecasters in the linked site undershot the mark.

And I certainly wasn't advocating trading on the basis of such forecasts. I would hope that most readers learned that most of the forecasts produced by the talking heads on TV aren't much better than guesses.