Wall Street takes the L on price targets… again.

Short-term price targets are useless.

I did this post last year but it is that time again!! I know everyone is a huge fan of the big banks. You know, the guys you have your checking and savings accounts with… the guys who are paying you .000001% to hold your cash while they scalp 4% on that risk-free?

When people in the industry say that no one can make short-term price predictions, we usually mean it. 2023 and 2024 are great examples of this. Wall Street got it wrong again this year. The banks with a plethora of resources, some of the brightest minds and I’m sure employees who are “reasonably compensated” for their efforts pretty much all got it wrong.

Towards the end of each year, strategists from each firm usually give their prediction for the S&P 500 in the coming year.

Check out where Wall Street thought we were headed in 2024 in the awesome graphic below from my friend, Sam Ro! If you don’t already subscribe to TKer, you should. If I need to know what is going on in the financial world, TKer is where I am headed.

So… currently the S&P 500 sits at 6,049 at the time of writing this piece… just a little ways away from even the highest target… and by a little ways away I mean about 10%...

To reach JPMorgan’s initial pierce target at this point, we’d need to sell off about 30%. Something to that degree has happened about 4 times since 1980. Check this out on drawdowns.

So, Wall Street was pretty much completely wrong and if you allowed these predictions to impact your long-term investment strategy it likely did not help you at all.

2024 has turned out to be another absolutely stellar year for the market. We are currently up over 27% on the year. It has been relentless. Those who were in cash at the end of 2023 waiting for the market to “cool down” and enter have been tormented by stocks ripping throughout the year.

Capitulation can go both ways. Exiting or entering the market… but in either case it is usually driven by emotion.

Most are saying that this is arguably a healthier market; with broader participation from small and mid-caps.

I will write this post each year. Not only do we get to dunk on Wall Street, but we get a real-time idea of how hard it is to predict markets over short periods of time. 1-month, 1-year, 2-years, even 5-years are not time frames I want to focus on. Let’s focus on decades.

“Don’t give me timing, give me time.”

- Jesse Livermore