Wall Street's Strategists About As Good As Monkeys Throwing Darts
Published Friday, February 19, 2016 at: 7:00 AM EST
The Standard & Poor's 500 had its best week of 2016, gaining 2.8% in the four days of trading ended Friday, February 19.
2016 has gotten off to a difficult start for stocks. The S&P 500 started the year at 2044 and closed Friday at 1918, about a 5% loss for the first seven weeks of the year.
Meyer had a successful career on Wall Street as a portfolio manager and senior strategist for one of the world's largest investment companies before launching an independent economic research firm in 2009. Every year since 2007, Meyer has tracked the sector predictions of what Barron's says are Wall Street's "top strategists," and every year the strategists' picks prove to be wrong.
Meyer says the 10 forecasts made by Wall Street's top strategists in a Barron's cover story in December 2014 were not even close to picking the best and worst sectors. To be fair, the Wall Street strategists in 2015 did make two correct calls on the 10 industry sectors comprising the Standard & Poor's 500 index. They were right about tech and utilities. However, the Barron's panelists missed three calls and were totally wrong on three more.
Energy, which the Barron's strategists, as a group, liked - three of the 10 Wall Street firms had been bullish on energy in December 2014 and one was bearish on energy stocks - lost nearly a quarter of their value in 2015. Yet more of the Wall Street strategists had been bullish than bearish on the energy sector.
Financials and industrials were the among the industry sectors that the strategists, as a group, favored. Financial and industrials trailed the S&P 500.
More of the 10 strategists had been neutral or negative on the two best-performing sectors, consumer discretionary and consumer staples. These two sectors topped the list of 10 S&P industry groups.
If the top Wall Strategists' picks seem to not be highly correlated with actual returns, it is because that is the reality.
- Staying On Track Amid The Ukraine And Inflation Crises
- For Investors, 2022 Is Turning Into A Test
- Is The Economy Brightening? Or Is The Federal Reserve Slamming The Door On Growth
- Financial Economic News In Perspective
- Stocks Closed Lower This Week On Inflation Fears
- The Main Risk To Investors Now Is Federal Reserve Policy
- Service Sector Jobs Are Catching Up
- Stocks Returned +8.3% More Annually Than 90-Day T-Bills In Past 20 Years
- Perspective Amid A Moment Seeming Fraught With Investment Risk
- Two Years After The Pandemic Began
- Turning The Page On A Dark Period In History
- Russia-Ukraine War Erupted And Inflation Worsened But Outlook Drove Stocks Higher For The Week
- Investment Perspective Amid Risks Of Fed Tightening, Covid Variants, And European War
- S&P 500 Lost -1.9% Friday; Latest U.S. Economic Data Are Strong
- January Job Formation Figures Crushed Expectations, Amid A Shortage Of Workers
- S&P 500 Closed Up 2.4% Friday After A -10% Correction
- Stocks Declined Sharply, Even As Economists Expect 3% Growth In 2022
- Should You Care About Wall Street Stock Market Predictions?
- Weekly Economic Update For Investors