[Chart] Wall Street Isn’t as Smart as You Think…

Wall Street’s top analysts have done it again…

They’ve put their reputations on the line to guess where the S&P 500 will end the year.

Here are some of the top predictions…

S&P Chart

The S&P 500 started the year at $3,230. Which equates to a consensus growth rate of just 2.875% over the next twelve months.

Not great compared to the 30.43% gain that the S&P 500 tallied in 2019…

But Wall Street’s smartest minds have spoken. So these estimates have to be accurate, right?

Not so fast.

You see, for a bunch of Ivy-leaguers who spend 24/7 looking at markets, Wall Street’s predictions aren’t as spot-on as you’d think.

For proof, let’s just look at how these pros predicted 2019 would turn out…

S&P Chart

Not so great, huh?

The actual S&P 500 return was 30.43% — more than double the consensus estimate of 14.45%.

And the closest analyst was still over 10% away from where the S&P actually ended the year.

But a congratulations is still in order for Goldman Sachs’ David Kostin. You’re the big winner — or the smallest loser. Whichever you prefer!

Now… why am I telling you this?

Is it because I despise the big banks that game the system in their favor better than you and I ever could?

Well, kind of…

But I don’t completely hate them! In fact, they actually make my life a lot easier by publishing valuable research that I use here in The Daily Edge.

The real reason I’m telling you this is because whether you think so or not, you ARE qualified to manage your own retirement account.

You don’t need to pay outrageous management fees to these big banks who only know you as an account number and have countless other accounts bigger than yours.

Because the truth is, nobody can correctly predict every gyration in the market. Even if you’re a seasoned Wall Streeter like the analysts mentioned above.

But what you can do is implement the same tools and strategies they use to drastically turn the odds in their favor — many of which we talk about here in The Daily Edge.

And today, I want to share the most important strategy — which is especially relevant in this current market environment…

Stay allocated.

You see, while we’re not forecasting a recession anytime soon. It’s hard to disregard how quickly some of the market’s hottest stocks have moved higher over the past few weeks.

  • Apple Inc. (AAPL) is up over 13% in one month.
  • Nvidia (NVDA) is up 10% in one month.
  • Tesla Inc. (TSLA) is up a whopping 47% in one month.
  • Even Macy’s (M) has seen 15% gains since mid-December.

If you’re holding high-flying stocks like these in your portfolio, odds are their recent rise has caused the equity portion of your portfolio to out-grow the other assets — throwing your whole portfolio out of whack.

So today I’m checking in on you.

Is your portfolio properly allocated?

With stocks hitting all-time highs on a near regular basis, now would be an excellent time to trim some of the names that have risen “too-far too-fast,” or even some of the laggards in your portfolio for tax reasons.

Whatever the case, just ensure that your portfolio is properly allocated to fit your personal situation.

Because the truth is, nobody knows exactly what tomorrow’s market will bring. Not even the smartest men and women on Wall Street.

Here’s to keeping your edge,

Davis Ruzicka

Davis Ruzicka
Managing Editor, The Daily Edge
EdgeFeedback@StPaulResearch.com

P.S. Zach’s weekly Q&A series is scheduled to start this week! But there’s just one problem… We need more Qs! If you’ve got any retirement… income… or investing questions that you’d like answered by our income expert Zach Scheidt, email us at EdgeFeedback@StPaulResearch.com. And look out in the next few days for your question to be answered in an alert!

 

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Davis Ruzicka

Davis Ruzicka is the Managing Editor of The Daily Edge. Davis is an experienced value investor with a degree in Finance from The University of Maryland. Today, Davis is pursuing his Chartered Financial Analyst (CFA) designation in his spare time while continuing to learn from seasoned investors Zach Scheidt and Alan Knuckman.

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