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Annual Wall Street Prediction Follies-2024 Thumbnail

Annual Wall Street Prediction Follies-2024

Image: Courtesy Miikka Luotio - Unsplash                                             

By: Jon Aldrich

You might consider the “Costanza” method when it comes to Wall Street’s predictions.

We are heading into the end of the year 2023 and it sure has been a much better year than 2022 as far as the markets are concerned for both stocks and bonds. But now, we are in the peak season for Wall Street Analysts annual fail in predicting what the markets will do in 2024.

I wrote about this last year, when I said my Crystal Ball is Broken and apparently almost all of the blind mice on Wall Street had a defective Crystal Ball as well. Most of them followed up their abysmal 2022 predictions, with equally bad 2023 predictions. As I write this on December 20th of 2023 the S & P 500 Index stands at 4,767. Up very nicely for the year.

At this time last year, a survey of the top analysts at the big Wall Street banks predicted an S & P 500 level of 4,031 at the end of 2023. Ooops!  Below is the table of these “experts” predictions for 2023. Even the closest firm, Deutsche Bank is still about 277 points or over 6% away from where the index currently stands and the consensus is only off by a little over 700 points or 15% or so, but who’s counting? Obviously, these guys and gals are hoping you are not counting, because very rarely do they even come close to being accurate.

Source: Morningstar/MarketWatch

We are now seeing the Wall Street psychics trotting out their 2024 predictions and the media, as always, is eating it up. Here are some of the predictions they have for 2024. Do we really think they are going to be any better this year? The S & P is trading around 4,767 currently.

Goldman Sachs – 5,100 or about 7% above current levels

Deutsche Bank - (was one of the closer ones in 2023) – 5,100

BMO – 5,100

Oppenheimer - 5,200 about 9% higher 

Yardeni Research - 5,400 or about 13% higher than current levels

Bank of America - 5,000  about 5% higher than current levels

Morgan Stanley – 4,500 about 5.5% lower than current levels

JPMorgan Chase - 4,200 which would be about a 12% decline from current levels.

Ok, any bets on who is going to be the closest? In any given year the S & P 500 ends up positive for the year about 68% of the time and this number actually rises to 83% in the fourth year of the presidential cycle as 2024 will be. Hmmmm.

The other scary thing is that almost all of these analysts are predicting a soft economic landing in 2024, which probably means we will actually get a recession. You wish most of these banks would be predicting a recession as the chances would probably increase that we don’t get one if they were all predicting it.

Conclusion: You might want to consider the “Costanza” method if you plan on acting on these “predictions”. For those of you that remember the series Seinfeld, Jerry Seinfeld’s best friend on the show, George Costanza was generally a loser at everything he did, until one day he decided to just do the opposite of everything he thought about doing, and to his and everyone else’s surprise it worked out very well for him for a while and his fortunes turned around for a while, until reality eventually crept back in.

As for my prediction for 2024. I predict that some stocks will be up and some will be down. I am not foolish enough to offer a prediction for exactly where the S & P 500 or Dow Jones Average will end the year. I will leave that to the “experts”.

There is an old adage regarding the stock market that was coined by Bernard Baruch who amassed a fortune trading stocks – “The main purpose of the stock market is to make fools of as many men as possible.”