Every year at about this time Bloomberg gathers predictions for where the S&P 500 Index will end one year hence. To do this they poll market strategists from a variety of firms like Bank of America, Goldman Sachs, Morgan Stanley, JP Morgan, etc. From year to year they have roughly 12 to 20 participants in the survey. In addition to tracking their individual predictions Bloomberg tracks things like the high, low and median predictions.
For example, yesterday they published the results from 19 strategists. With the S&P 500 Index currently around 4770 the low prediction for 12/31/2024 is 4,200 (-12%), the high is 5,200 (+9%), and the median is 4850 (+2%). These predictions tend to make headlines. And there is this idea that the experts know best. So I imagine some investors use these estimates to make investment decisions. On the flip side anyone who studies the market knows that market timing is brutally difficult.
So I thought I would take a look at a brief history of these expert predictions to see how accurate they are.
Here is a graph of the high, low, and median predictions combined with the realized returns:
Interestingly, the most bearish prediction is not bearish enough three of twelve years and the most bullish prediction is not bullish enough six of twelve years. That means that only 25% of the time in the last twelve years were the actual results for the S&P 500 Index within the range of expert estimates.
Buyer (and seller) beware.
Note: These are all price returns and 2023's final return hasn't quite been written yet.