Good luck with the stock market in 2020: Morning Brief

Sam Ro
Managing Editor

Tuesday, November 19, 2019

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Wall Street expects the market to go up or down from here

It’s that time of year when Wall Street’s top stock market strategists publish their forecasts for the next year. But if you invest with one of the brokerages employing these folks, good luck in 2020. Because Wall Street is split on what’s next for the stock market.

On one end, you’ve got firms like Goldman Sachs and Credit Suisse who see the S&P 500 (^GSPC) ending 2020 at 3,400 and 3,425, respectively. Relative to Monday’s close, those targets represent gains of 8.9% and 9.7%.

On the other end, you’ve got Morgan Stanley and UBS, who both see the S&P heading to 3,000. That’s a decline of 3.9%.

These calls are supported by hundreds of pages of thoughtful published research. Everyone operates on the same historical data, and everyone will always warn of uncertainty.

Where they differ is how they see business unfolding in the year, which is understandably always hard to predict accurately. All of that is then calibrated with consideration to market valuations, which are interpreted differently by different people. Toss in some premiums and discounts for that uncertainty, and it’s a miracle that you see any agreement on Wall Street at all.

To be clear, none of this is to suggest that you should feel better if all the strategists were equally bullish or equally bearish. Most strategists are usually way off.

Investors, good luck in 2020! (Getty Creative)

Also, don’t forget: most reputable measures of market valuation tell you almost nothing about what’s to come in the next year. So it’s probably best not to bet the farm on any one of these forecasts.

That said, stocks usually go up. And that works great for long-term investors willing to stomach short-term declines. As Nicholas Colas, co-founder of DataTrek Research, wrote on Monday, “Equity investing is an optimist’s game in most years.”

In most years.

By Sam Ro, managing editor. Follow him at @SamRo

What to watch today


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