Although Wall Street is full of analysts making predictions year after year on the S&P500 target, for MOST investors, it just doesn’t matter.  If we examine some of the major institutions who forecasted for 2019 below, we will find that even the most renowned brands were drastically off the mark.

Wall Street Institution Predicted 2019 S&P 500 Target% Off the Mark
Morgan Stanley275017%
Bank of America Merill Lynch29509%
JPMorgan Chase30007%
Wells Fargo30306%
Goldman Sachs31004%

*As of 12/22/2019


You can see that 2019 certainly caught a lot of smart people off guard.  However, these results are not atypical.  Should you build your portfolio around investment bank predictions?  Absolutely not —investors ought to focus on their time horizon and objectives for their money.

Back in June I was speaking to a young investor on the airplane when the S&P500 was up around 20% since January and he was explaining to me how he was hedging his 401k because he was afraid of a market drop and that the market was just too high.  I hear these types of comments all the time and it is so frustrating.  The financial pornography and psychological bias have made investing for millennials very difficult.  Millennials have watched their parent’s stress and struggle through 2000-2001 and 2007-2008 and they are very scarred.

Fortunately, with the help of fintech or a financial advisor, success is on the horizon.  Financial education and behavioral financial advice can put and keep any young investor on the right track.  Here are some common questions to think about when deciding if you need to pay an advisor or should use a low-cost online service.

  • How much experience in finance do you have?
  • Are you emotional about money?
  • Are you aware of your biases and how they can adversely affect your financial life decisions? (Overconfidence, Confirmation Bias, Loss Aversion, etc.)
  • Are you a business owner or W-2 only employee(s)?

This list could go on, but typically someone with W-2 wages, tremendous finance experience and no emotion about their money can benefit significantly from the low-cost online platforms.  Those of you who need help, think about how shortsighted you are being by not finding someone to pay for good advice.  It is your financial future and life plan that you are jeopardizing by not planning very carefully.

As we start to imagine what 2020 can bring our investments, here at LifeManaged, we believe the market will go up, and the market will go down.  The day you finally get out of cash and into stocks at your financial advisor’s request, the market could subsequently crash 20% thereafter.  The Chinese trade war could drag on and hurt consumer sentiment and GDP.  Earnings growth could decline, and stocks could become overvalued.  Someone might launch a missile.  There will always be something to keep you worried, but markets reward discipline.

Long term investors shouldn't worry about short term events

Providing you have created a long-term plan that aligns with your values and objectives, it just will not matter what the market does in the short term.  Speak with our Certified Financial Planner today if you would like to understand how we can support your needs.

*Athanassios Panagiotakopoulos is an Investment Advisor Representative with Dynamic Wealth Advisors dba Life Managed. All investment advisory services are offered through Dynamic Wealth Advisors.

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