Wall Street's Strategists About As Good As Monkeys Throwing Darts
The Standard & Poor's 500 had its best week of 2016, gaining 2.8% in the four days of trading ended Friday, February 19.
2016 has gotten off to a difficult start for stocks. The S&P 500 started the year at 2044 and closed Friday at 1918, about a 5% loss for the first seven weeks of the year.
Meyer had a successful career on Wall Street as a portfolio manager and senior strategist for one of the world's largest investment companies before launching an independent economic research firm in 2009. Every year since 2007, Meyer has tracked the sector predictions of what Barron's says are Wall Street's "top strategists," and every year the strategists' picks prove to be wrong.
Meyer says the 10 forecasts made by Wall Street's top strategists in a Barron's cover story in December 2014 were not even close to picking the best and worst sectors. To be fair, the Wall Street strategists in 2015 did make two correct calls on the 10 industry sectors comprising the Standard & Poor's 500 index. They were right about tech and utilities. However, the Barron's panelists missed three calls and were totally wrong on three more.
Energy, which the Barron's strategists, as a group, liked - three of the 10 Wall Street firms had been bullish on energy in December 2014 and one was bearish on energy stocks - lost nearly a quarter of their value in 2015. Yet more of the Wall Street strategists had been bullish than bearish on the energy sector.
Financials and industrials were the among the industry sectors that the strategists, as a group, favored. Financial and industrials trailed the S&P 500.
More of the 10 strategists had been neutral or negative on the two best-performing sectors, consumer discretionary and consumer staples. These two sectors topped the list of 10 S&P industry groups.
If the top Wall Strategists' picks seem to not be highly correlated with actual returns, it is because that is the reality.
- Good News On The Economy And A Tax Alert
- Tax Bill Drives Another Stock Market Record And Gives You To-Dos By Year-End
- An Eventful Week In Wealth Management
- Leading Economic Indicators Surge, Stocks Break Record High Again
- Poo-Poohed By Politicians And Pundits, The U.S. Economy Is Booming
- The No 1. Fake News Story Of The Year Affecting Your Wealth
- News Affecting Your Wealth Dominated The Headlines This Past Week
- U.S. GDP Growth Surprise Propels Stocks To New Record
- Why Does The S&P 500 Keep Breaking Records?
- U.S. Stocks Nearly Doubled In The Last Five Years
- The Big Economic News The Media Keeps Missing
- Trump Tax Plan Upends Year-End Tax Planning
- Key Senators Agree On A Road To Cutting Taxes This Year
- Year-End Tax Planning Could End With A Thrill This Year
- This Week's News About Wealth Management
- The Good News The Financial Press Keeps Missing
- Despite A Chorus Of Bears, The Bulls Played On
- Stocks Dropped For Second Straight Week Amid Strengthening Economic Reports
- Despite Wall Street Guru's Terrible Advice A Year Ago, He's Back
- With Stocks Near All-Time High, Personal Income And Employment Data Are Released
- How Strategic Asset Allocation And Rebalancing Worked In The 12 Months Ended June 30
- Wall Street's "Top" Strategists' Recommendations Are Like Monkeys Throwing Darts
- Stocks Break Another All-Time High. What Is Going On?
- Stronger Than Expected Jobs Creation But CNBC Reports "Trouble Lurked"