The Bulls, The Bears, and the Go Nowheres – 2023 Market Predictions


This is the time of year to look at the Wall Street firms which publish an opinion on the market. At each of these firms, groups of highly compensated and knowledgeable people get together and develop forecasts of where they believe the market will be by year-end.

The market that attracts the most predictions is the S&P 500 index. 2022 was a very tough year for many investors, and the S&P 500 closed the year out at 3,840. Today, in mid-January, the index stands at 3,999. 

Below are the predictions of 22 firms’ best guess on where the market is headed this year. I have grouped them into the Bulls, the Bears, and the Go Nowheres.

The average prediction for the end-of-year 2023 S&P 500 from this ‘all-star’ forecasting team is 4,134. There are two other recently conducted polls of S&P 500 predictions for 2023: one by Bloomberg, which produced an average of 4,009, and one by Reuters of 41 firms which showed an average of 4,200.

The comments made by each of the firms tend to be similar, with two of the most frequently cited issues being the impact of the Fed raising rates and the level of corporate earnings. On the latter, key questions include how well will company executives navigate the impact of inflation on goods and labor and whether consumers will still buy their products. All of this is wrapped around the big question of whether there will be a recession at some point this year.

Checking market predictions is a fun parlor game to play as we start the year, but the reality is that nobody knows what the future holds. The firms that play this prediction game make a lot of money off trading. As a trader, you must have an opinion on what the market will do. That time frame may be a year, a month, a week, a day, or the next minute. By contrast, we are investors, not traders. Our horizon is long-term. 

I doubt that many of the players in this prediction game look in the rear-view mirror to see how well they did with their projection last year. I know why – most of them are simply, and often horribly, wrong. 

Carl Gambrell