Should You Care About Wall Street Stock Market Predictions?
Published Friday, January 14, 2022 at: 7:25 PM EST
Wall Street’s forecast for 2022 is for a 4% gain in the Standard & Poor’s 500 stock index. But what does that really mean? Should you care? The answer is “not so much.” Wealth management is not predicated on predicting the stock market’s performance over the next year.
No one can reliably predict stock prices year after year and Wall Street’s no exception, according to this chart by independent economist Fritz Meyer. If the consensus forecasts by top strategists on Wall Street had been accurate since 2006, the red dots would all fall on the black line representing the S&P 500.
Illustrating how wildly wrong Wall Street’s best experts can be, in December 2020, the consensus forecast of the 10 strategists was for the S&P 500 to close 2021 at 4040. However, the S&P 500 closed 2021 at 4766, exceeding Wall Steet’s consensus forecast by more than 20 percentage points! The actual gain was three times Wall Street’s expectations!
We don’t wish to perpetuate the myth that investing successfully is predicated on predicting the stock market’s one-year performance. Building wealth involves tax management of your investments, adhering to a discipline, and a plan optimized for the rest of your life, that takes care of your family.
The S&P 500 stock index closed Friday at 4,662.85, about 3% lower than its January 3 record-high. A key measure of the confidence in the future of the United States, the S&P 500 price was essentially flat for the day. Gaining a scant +0.08% from Thursday, the index lost three-tenths of 1% from a week earlier. Since the March 23, 2020, pandemic bear market low, the S&P 500 is up +70.3%.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
- Four Signs A Recession Could Be Short And Shallow
- Odds Of A Soft Landing Shrunk After Friday's News
- Bad Inflation Surprise Sends Stocks Down Sharply
- It Could Be A Long, Hot Summer For Investors
- What A Difference A Week Makes
- Amid Stock Market Turmoil, +2.3% Growth Projected In 2022
- 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?