For 2019, the S&P 500 has witnessed an increase in value of 26.4% (to 3168.57 from 2506.85) to date. Where do industry analysts believe the price of the index will go from here?

Industry analysts in aggregate predict the S&P 500 will see a 7.5% increase in price over the next twelve months. This percentage is based on the difference between the bottom-up target price and the closing price for the index as of yesterday. The bottom-up target price is calculated by aggregating the median target price estimates (based on company-level estimates submitted by industry analysts) for all the companies in the index. On December 12, the bottom-up target price for the S&P 500 was 3407.46, which was 7.5% above the closing price of 3168.57.

 

How accurate have the industry analysts been in predicting the final value of the S&P 500?

 

 

 

Page 6 :https://www.factset.com/hubfs/Resources Section/Research Desk/Earnings Insight/EarningsInsight_121319.pdf

There sure is a lot of optimism about the future in that report:

Quote

For CY 2019, analysts are projecting earnings growth of 0.3% and revenue growth of 3.8%.
For Q1 2020, analysts are projecting earnings growth of 5.4% and revenue growth of 4.4%.
For Q2 2020, analysts are projecting earnings growth of 6.9% and revenue growth of 4.9%.
For CY 2020, analysts are projecting earnings growth of 9.7% and revenue growth of 5.5%.

So for this quarter, which is ending in a week, so we have a lot of data, analysts predict earnings growth of 0.3%.

 

But already next quarter it increases to 5.4% and for next calendar year, where we may get a less business friendly administration, we are still looking forward to the end of the China trade war (started by an ignorant and irrational person who doesn’t understand economics 101), and Brexit seems to be a certainty, analysts predict 9.7% earnings growth?

 

I’m a little skeptical, and with the S&P trading at a historic high (forward P/E) I think we are more likely to see a correction than 7.5% growth.

It's 3222 now and if any analyst has ass in his pants, let him take at stab at 4000 (or 2500) in 2020

 

But most analysts are a step above the bank minimum wage of $23/hr. so their analysis is worth just that. 

I love how the chart is conveniently limited to the longest bull market run in history (starting the year after the 2008 financial crisis.)  Expand that dataset to 20 or 50 years and I'd bet the accuracy of those "expert" forecasts is quite different.  

20 year annualized S&P 500 Return (Dividends Reinvested) = 6.041%

50 year annualized S&P 500 Return (Dividends Reinvested) = 10.491%

 

20 year annualized S&P 500 Return (Dividends Reinvested) adjusted for inflation = 3.815%

50 year annualized S&P 500 Return (Dividends Reinvested) adjusted for inflation = 6.327%

 

Most strategists on Wall Street are predicting a single digit up or down next 12 months.

I am a fan of Mike Wilson and Fundstat's Tom Lee ..one bearish one bullish.

 

https://www.marketwatch.com/story/where-will-the-sp-500-go-in-2020-here-are-the-most-bullish-and-bearish-strategists-2019-12-03