This is one of my favorite posts to write every year as we get to look back on Wall Street predictions and see how they panned out. We have done this in 2014, 2015, 2016, 2017, 2018, 2019, and 2020 so it is a tradition to see which strategists did well and which missed the mark.
Last year, the strategists predicted a slight up year market for 2020 with an average target of +1.6%, 3283, for the S&P 500. Of course, no one predicted a global pandemic, and I doubt they would have forecast this number if they knew what was ahead. Despite the lockdown induced recession, the epic stimulus from the Fed and policy makers helped drive stock market indices to all time highs and the S&P finished at 3756, up over 16%.
Last year's biggest bull was CSFB's Jonathan Golub at 3425 and that wasn't very close. Second place was a three way tie with a prediction of 3400. Now let's take a look at their thoughts on 2020...
Predictions for 2020
After looking at all the Wall Street reports, here are the targets from Wall Street's top strategists.
The good news is that not one is predicting a down market for the S&P and the average sits at 4076 or +8%. This is one of the most bullish predictions since 2014. The only other super bullish period was heading into 2019 with the average prediction of +13% and the market blew by that by a wide margin. Hopefully this happens again in 2021!
The most bullish on the street is JP Morgan's Dubravko Lakos-Bujas with a target of 4400 which would be over a 17% gain!
The two bears on the list are Citi's Tobias Levkovich and BoA's Savita Subramanian with a target of 3800 essentially predicting a flat market.
Note that the Runnymede investment team will discuss our outlook on 2021 on our quarterly webcast in the next couple of weeks. If you are interested in attending, please email us at email@example.com.
Stock market nirvana ahead
Lakos-Bujas is the biggest bull on the street as he believes over $1 trillion will flow into stocks next year. He says this could be a "market nirvana" for stocks. He sees risks subsiding with the easing of the trade war, coronavirus vaccine progress and the conclusion of the US election.
"We're looking at about a trillion dollars worth of equity inflow/equity demand coming from systematic flows, hedge fund positioning, further retail buying, buybacks and very importantly, a continued rotation from non-equity into equity," Lakos-Bujas told CNBC. "So we're looking at a pretty positive environment especially for the first half of next year."
The Timid Bears
Now onto the cautious views of street... Levkovich says that the rotation out of highly-valued technology stocks, the market’s biggest industry, is likely to hold back the S&P 500.
Subramanian says, "A lot of optimism is priced in already on vaccine/recovery." She noted vaccine execution and longer lockdowns are among the risks stocks will encounter next year.
What do you think will happen in 2021? Are you a bull or a bear for the New Year?