Published Friday, February 19, 2016 at: 7:00 AM EST
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.
Last week's surge in stock prices could continue, or it may not. Predicting the next turn in the market is not what we do. It is what Wall Street's largest firms say they do, but they don't seem to be doing it very well.This table is from Fritz Meyer, an independent economist whose research we license. The table shows just how wrong Wall Street's top strategists were in their predictions about which sectors would outperform in 2015.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.
This chart shows you all of the strategists' sector picks in Barron's, according to Meyer, since he began tracking them in 2007. If the strategists' forecasts would have been right, the black dots would all be aligned on or near the red line. But the strategists' picks are scattered randomly. The picks by Wall Street's so-called top strategists are about as reliable a methodology as monkeys throwing darts.The articles written in this newsletter were written by a journalist hired by Advisor Products, Inc. and provided to you by The Clark Group Asset Management. Their accuracy and completeness are not guaranteed. The Clark Group Asset Management is not a legal or tax advisor.
GET IN TOUCH
24941 Dana Point Harbor Drive
Suite C210
Dana Point, CA 92629
Phone: 949-558-3898
Fax: 949-558-3901
theclarkgroup@clarkgroupam.com
© 2024 The Clark Group Asset Management.
Jamie Dimon, CEO of JP Morgan Chase, the largest U.S. bank, warned that a “hurricane” was about to hit the U.S. economy in June 2022, and Ray Dalio, founder of
The Clark Group’s mission is to build long-lasting relationships with our clients and help them organize, grow and protect their hard-earned assets through life’s transitions. Along the way, our goal is to provide peace of mind for our clients through trust, thoroughness and transparency. Our experience has taught us that our value comes from helping clients make sound financial decisions while minimizing the emotion that often comes with investing. We are here to guide you through both good and bad economic times.
As a fiduciary financial advisor, we have a legal obligation to always act in your best interest and disclose any conflicts that could prevent us from servicing you. Furthermore, our compensation is fee-based which allows us to be completely objective and aligns our incentives with our client’s best interests. We provide clients in the Los Angeles, Orange County, and Southern California area with investment management, retirement planning, portfolio risk assessment, and charitable giving strategies.
This website uses cookies for navigation, content delivery and other functions. By using our website you agree that we can place cookies on your device. I understand