As of November 2021, the median of 12 forecasts was 4,825, according to Bloomberg. The highest was 5,300, from Brian Belski of BMO. The lowest was 4,400, from reliable bear Michael Wilson of Morgan Stanley

 

 

 

Wall Street's 2022 stock market forecasts were way off. Here's what they see in 2023: Morning Brief

Julie Hyman

·Anchor

Wed, December 28, 2022 at 6:00 AM EST

 

 

 This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Wednesday, December 28, 2022

Today's newsletter is by Julie Hyman, anchor and correspondent at Yahoo Finance. Follow Julie on Twitter @juleshyman. Read this and more market news on the go with Yahoo Finance App.

We all have our little traditions to end a year.

Some people make resolutions, or "best of" lists.

I look back at stock market forecasts from the prior year.

Part of Wall Street strategists' job is to set targets for the S&P 500. And as equities limp toward the finish line for 2022, I wondered if anyone had seen the drop coming.

The short answer is no.

As of November 2021, the median of 12 forecasts was 4,825, according to Bloomberg. The highest was 5,300, from Brian Belski of BMO. The lowest was 4,400, from reliable bear Michael Wilson of Morgan Stanley.

With three trading days to go in 2022, the S&P 500 closed at 3,829.

S&P 500 (^GSPC)

 

To be fair, there were a lot of unpredictables this year. Unprecedented, some might say.

Russia’s invasion of Ukraine was chief among them. Investors also had to contend with China’s continuing COVID shutdown, persistent global inflation, a sharp drop in bonds along with stocks, a tech plunge, and a huge (alleged) crypto fraud. And this list is not exhaustive.

Some strategists anticipated those events — with the exception of the first — but few got it all right.

Of course, the strategists changed their forecasts as more information rolled in. By mid-September, around the time the index was making what turned out to be its lows for the year, the median of 23 forecasts had moved down to 4,300. By mid-October, it had fallen further, to 3,988.

Forecasting is especially tricky when it comes to picking the level where an index will end the year. Strategists use models with a multitude of inputs, both "top-down" (i.e. aggregate earnings estimates) and "bottoms-up" (i.e. company-specific earnings estimates).

And some strategists avoid the index-forecast game entirely.

One of them is Michael Darda of MKM Partners, who carefully couched his S&P target comments in a recent note to investors.

"Back in 2020, the S&P 500 bottomed at about 18x five-year forward estimates, which would be about 3300 or so, roughly a 14% fall from where the S&P 500 closed last week," Darda wrote. "Although this is simply a rough starting assumption (it could be worse and also could be better if we are wrong about a recession next year) keep in mind that in the event of a downturn, markets usually bottom out about two-thirds of the way through the recession (or four-to-five months before a recovery begins)."

When asked why he avoids a specific target, Darda quoted famous economist John Maynard Keynes: "Better to be roughly right than precisely wrong."

If you read what all the veteran market forecasters write, not a single one mentions that Biden's policies had anything to do with where the market is...not one

They talk about

1. Inflation

2. The war in Ukraine

3. The Crytocurrency collapse

4. The fed missing the ball ...

But somehow, Old Guy knows something they don't ... somehow, he has teh silver bullet, as armchari quarterback as well ... He knows that this is all Biden's fault ... He also knows that Trump is innocent of everything ..

Let's see how this all plays out <wink>

So you Know the market is down.  Quit posting how good the market is with Biden!

And you realize that events cause changes in the market place, not a timely cycles.

You even list the events from the article,  inflation, war in Ukraine, Cryto collapse, and the Fed missing the ball?

Good for you, but if you are to look at these issues and there originally beginning, you know they are from failure of our government and the White House.

1. Inflation, no bebate here, this is all on Biden!

2.  War in Ukraine, no bebate here, this is all on Biden, this war never would have even started if he was not so incompetent!

3,  Cryto collapse, well a big money guy giving millions to democrats, we all ready understand if the government would have regulated him and not ignored him, just maybe the damage would be less.  So back on Biden's back, he is the administer of the government.

4.  The Fed missing the ball,  someone will always point the finger at them.  But what they do is try to keep the economy in balance.  So actions they take are always a counter action to an event.  I this case increasing the prime interest rate is an action to slow down or even stop the inflation, SEE NUMBER ONE. Biden did it.

Unfortuneatly you're talking to extreme lefty libs here that simply don't understand basic economics. And I'm not talking about lib economics.

Liberals will brag about the stock market when it makes gains and completely ignore the market when it loses. Which has been far more times than not in the past two years.

Biden inherited a very strong economy/market. It was at 30,000 when he took office. Got as high as 36,000 but has plummeted ever since and has been hanging around the 32K / 33K mark.

Consumer confidence is at an alltime low. Every consumer product has tripled and will never get back to anywhere near what we considered normal for decades.

We have people on here praising Biden for the lowering gas prices. Does it get any more ridiculous than that. Gas has gone up over 40 cents/gallon in the last two days.

Where are the resident libs explaining that little fact. Oh yeah, it's the cold weather AND Russia causing it.

They like to have it both ways. Blame Trump when it goes to crap. And praise Biden when something resembling good happens. Nothing comes to mind though :)

You can't talk to lefties because they know everything. Everyone else are ignorant dummies.

Civilized discussion will not happen. We've  all tried for not

Biden inherited a very strong economy/market. It was at 30,000 when he took office. Got as high as 36,000 but has plummeted ever since and has been hanging around the 32K / 33K mark.

The "32K / 33K mark" that you speak disparagingly of is higher than at any point in the Trump administration, excepting a total of about 4 months interrupted by the COVID Recession, which Trump inarguably contributed to the severity of.

Not to mention that 'the Market' is not the economy. It's a broad estimate of the future- you don't buy stock to repeat the past as the future if you're smart. 

Old guy

Stop sounding like a broken record sore loser. Thats all you come off as. You're bitter that Trump got beaten by sleepy joe, so all you're capable of doing is blaming everything on Joe

The forum collectively pities you 

Trump got beat in a landslide and now, his Own daughter wants nothing to do with him

His own cabinet has testified against him 

With Biden?

He's leading the coalition against russia to help ukraine and has managed to help Ukraine with no boots on the ground.

What you're unable to do is find a reputable person who states inflation is all Joe'a fault

The Trump train is about to get derailed :)