It’s that time of year again when Wall Street strategists forecast their brains out about where the market is headed next year.
They call these attempts to divine the future outlooks.
Earlier in December Sam Ro compiled various forecasts for 2026 and discovered the following:
The strategists followed by TKer have year-end S&P 500 targets ranging from 7,100 to 8,000. This implies returns between 3.3% and 16.4% from Friday [December 5th’s] close.1
This implies that those that think about investing constantly don’t agree on where the market is headed.
It also begs the question: is what they usually foresee accurate?
Matt Cerminaro, aka Chart Kid, has the data over the last 25 years2:
Translation: Wall Street predictions don’t match reality too well.
Cerminaro shows how most of the time strategists underestimate market performance:
The main takeaway for me when looking at this data is that most of the time, strategists underestimate how the market will perform the next year. This is the case 70% of the time.3
Furthermore, he is spot on in pointing out strategists’ jobs are incredibly difficult and recommends giving “them some grace.”
I’m a desperate grace addict, so I’m all for it.
But we should also mercifully remind our readers that investment outlooks just aren’t that valuable.
Forget what strategists say might happen next year for a second, the stock market itself has a hard enough time hitting its own reality-based average year to year.
Wall Street has only hit its own average 6 times since the 1950s.
This justifies a line from one of my favorite investors, Howard Marks:
If forecasting is not valuable, then you can do a great service to your clients by telling them that.4
Whether you are a client or not, consider yourself told.
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Sources:
- “Wall Street's 2026 outlook for stocks 🔔, emailed Sunday December 7th, 2025.
- “25 Years of S&P 500 Forecasts”, December 10, 2025. Accessed online: https://chartkidmatt.com/p/25-years-of-s-p-500-forecasts
- Ibid.
- Howard Marks on Goldman Sachs’ YouTube Channel: https://youtu.be/wkJXQ46ma8I