Two years ago, as part of its one-year forward forecast issue, the ten “experts” polled by Barron’s in its one year forward forecast, predicted that the S&P would close 2015 an average of 2210, roughly 7% higher then the final print of 2014, which was at 2,058.9.
Alas, their enthusiasm proved overoptimistic, and the market ended up missing the consensus forecast materially, suffering a down year in 2015, and the S&P 500 closed at 2,043.9. Which is why optimism was somewhat more muted in the part of its one-year forward forecast issue, which last December predicted the S&P would close just fractionally above where these same forecasters expected the S&P would end 2015 the year prior, and predicted that the final print of December 31, 2016 would be roughly 2,220.
In retrospect, that particular forecast was far closer to the market, with the S&P 500 closing Friday at 2,258, or about less than 2% above the consensus estimate.
So, what do the experts think now?
As is common knowledge by now, less than two months ago, the prevailing consensus was that while a Hillary victory in the presidential election would be bullish for risk assets, a Trump victory would likely result in a correction. And, sure enough, as almost always happens, and as David Rosenberg reminded us earlier today courtesy of Bob Farrell’s Rule #9, “When all the experts and forecasts agree, something else is going to happen.“
What happened was a dramatic surge in the market because Trump was elected, as his victory unleashed the hope of massive fiscal stimulus, something none of the experts predicted would happen.
Which brings us to the latest gathering of experts.
Over the weekend. Barron’s held its latest annual strategist roundtable. The article explaining their outlook starts, appropriately enough, with: “Nobody saw it coming.” And it wasn’t just the Trump victory. As the following chart from Barron’s notes, 2016 was a year of surprises, which however after an initial scare, were mostly to the upside, even as the news kept getting progressively worse:
But it was the outcome of the November 8 election that threw everyone for a spin:
The unexpected election last month of Donald J. Trump as president has been a game changer for the 10 investment strategists whose market outlook Barron’s solicits twice each year. As stocks took off on Nov. 9 and thereafter, fueled by investors’ enthusiasm for Trump’s expected pro-growth agenda, even our group’s bears turned bullish. Wall Street’s seers expect the bull’s romp to continue well into next year, and posit a possible awakening among institutional and individual investors of the animal spirits that were dormant for the past seven years.
