The chart below has been doing the rounds today. It shows the S&P 500 versus analysts expectations for the index, as you can see analysts are a wildly optimistic bunch.
Source – Bloomberg
The reasons this has caused so much angst is that it now seems to portray Wall Street as being bearish because the S&P 500 has moved beyond the consensus of where it should be. I should note that analysts forecasts are for want of a better word simply a guess based upon whatever narrative is buzzing through their heads at the time. To give you an indication of how poor the forecasting record of advisers is I dug the following table out of the archive. It looks at the consensus of bullish and bearishness of advisers and then examines whether the market was higher or lower in the following quarter. If the majority of advisers are bullish then the market should be up, conversely if they are bearish then the market should finish down. It didn’t actually work out that way.
Predictions are for morons.