Hits and Misses (but mostly misses)

By Andre F. Shashaty

When 2014 ended a short while ago, investors finally learned who’s crystal ball was foggy and who’s was clear — or at least who avoided climbing out too far on a limb.

The biggest miss in the world of high-powered market prognostication probably had to be that of Gina Martin Adams, a stop investment strategist for Wells Fargo.  She started out the year with the lowest S&P 500 target on the street, at 1,850.  At one point last fall, she said it could be even worse than that.

Like so many other strategists, she believed the economy would recover quickly enough to force the Federal Reserve to raise interest rates in 2014.  It did not happen.  Part of the general expectation was that as rates rose, bond yields would rise as prices dropped, including for Treasuries.  Oooops!  Twenty-year Treasuries climbed and climbed in price for most of the year, and those of us who invested in them despite the warnings did quite well.

So, how far off was Ms. Adams in her S&P target?

At year’s end, the S&P closed at 2,058.9.  That’s 200 points higher than she predicted.  This is not to pick on one person.  Not at all.  In future installments of Hits or Misses, I’ll pick on a lot more bad guessers.  The key point is that they all have one thing in common, they are guessing.

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