“It’s hard to make predictions. Especially about the future.” That’s one of my favorite aphorisms attributed to Yogi Berra. At the beginning of every year hundreds of economists, strategists, and self-proclaimed pundits announce their annual predictions for the capital markets, blithely ignoring their own past history. Let’s take a look back to see how well some of them did in 2023.

In December 2022 the Financial Times surveyed 44 economists regarding their expectations of the next U.S. recession. Nearly 85% predicted one would occur sometime in 2023 and half expected it to arrive before mid-year. It’s now January 2024 and we’re still waiting.

Morgan Stanley’s chief U.S. equity strategist – who was one of the very few that had correctly predicted the 2022 stock market collapse – announced in early 2023 that stocks would fall so much during the first half of the year that even with a second-half rally they would close the year flat. Other top Wall Street firm predictions were slightly more positive. Their consensus was that the S&P 500 would end the year 2023 at 4009, up 4.4%. Its actual closing price was 4770, a gain of over 24%. No one came even close.

Most predictions are usually wrong, often spectacularly (as was the case last year). My first question: why do they bother? After all, these predictions cost money. The people who make them are well-paid and often have staffs contributing their time and energy to coming up with these numbers. The companies for which they provide their so-called insights evidently consider the effort worthwhile since they continue this exercise every year. Perhaps it would be more cost-effective for all the firms desiring predictions to outsource this annual activity to some independent company or governmental agency. It wouldn’t be any more accurate but at least they’d save money on the process.

Cost aside, another question I have is how are all these prognostications expected to be used? When Morgan Stanley predicted that the stock market would do poorly last year, did they immediately sell out all their clients’ stock positions? I doubt it. But it is possible that they recommended stock allocation reductions. Imagine how you would have felt if your broker advised you to reduce your stock holdings because they expected poor growth, only to discover at the end of the year that they were totally wrong. Why would you want to continue to listen to advice like that?

I’m not picking on Morgan Stanley in particular. The fact is, nobody has been able to predict the future with any degree of consistency. But it would be nice if all these so-called experts would stop promoting their guesses about the future as anything more than that.

I did not capture any specific predictions at the beginning of 2023. But the New York Times has documented several firms’ S&P 500 targets for year-end 2024. My calculation of the consequent approximate gain or loss for this year is additionally shown in parentheses:

• JP Morgan Chase: 4200 (-12%)
• Morgan Stanley: 4500 (-5.5%)
• Wells Fargo Securities: 4625 (-3%)
• UBS Global Wealth Management: 4700 (-1.5%)
• Bank of America: 5000 (+5%)
• Deutsche Bank & Goldman Sachs: 5100 (+7%)

Stay tuned for the beginning of 2025 to see how closely any of those guesses actually turned out to match reality.