Experts, Predictions, and the Uncertainty of the Stock Market, Ep #257

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Did you know that you can pay someone to give you advice on what to bet on? They can look at historical data like rushing and passing yards, touchdowns, and more—but so can we. Honestly, historical data can only tell us so much. If you bet on a game, you are really making a lucky guess.

Is it really so different with the stock market? When it comes to predictions—whether for the Super Bowl or the S&P 500—there is a lot of uncertainty. So, let’s break down how predictions are made and whether or not they should guide our investment decisions.

Predictions are everywhere—whether for the Super Bowl or the stock market. But how reliable are they? In episode 257 of Best in Wealth, we explore the dangers of betting on expert predictions and why diversification is key for your portfolio. Click To Tweet

Outline of This Episode

  • [1:13] The Super Bowl: What you can bet on?
  • [2:30] Why are we trusting betting experts?
  • [7:50] Expert predictions for 2025
  • [11:32] Reviewing predictions from 2024
  • [18:06] How do we build a portfolio?

Expert predictions for 2025

Most of the top analysts—Oppenheimer, Wells Fargo, Deutsche Bank, and others—are bullish, predicting that the S&P 500 will rise in 2025. The consensus seems to suggest that the market will average a 10% return, which has been the long-term norm. Oppenheimer Asset Management stands out with an optimistic prediction of 18.4%, implying that 2025 could be a great year for the market.

However, these predictions come with a significant caveat—the stock market, especially the S&P 500, is notoriously volatile. We have seen massive swings in the past, from a 38% drop in 2008 during the Great Recession to a 25% rise in 2024.

BCA Research, on the other hand, predicts a 25.8% drop, highlighting just how different expert opinions can be. This stark difference—43% apart between two top analysts—raises an important question: if the experts cannot agree, how reliable are their predictions? It is a reminder that while these predictions may be based on data, the unpredictability of the market remains ever-present.

Experts predict the future, but how often are they right? In episode 257 of Best in Wealth, we dive into the unpredictability of stock market forecasts and share why building a diversified portfolio is your best bet for long-term success. Click To Tweet

Reviewing predictions from 2024

Did the experts hit the mark last year? The S&P 500 went up around 25% (with dividends) and 23.3% without dividends.

  • Oppenheimer, the most bullish of the experts, predicted a modest 8% increase, but the market ended up being nearly three times better than that!
  • Many other firms—Goldman Sachs, BMO, Bank of America—also predicted positive returns, but the actual outcome was far beyond their expectations.
  • In a striking example, some analysts predicted that the S&P 500 would finish the year with negative returns—forecasts that couldn’t have been further from reality.

This discrepancy illustrates an important point: even the most well-educated and experienced analysts can be drastically wrong. It shows that predictions are based on what experts know at the time, but they can’t account for the countless variables that influence market behavior throughout the year, such as political changes, economic developments, and unforeseen global events.

How do financial stewards build a portfolio?

The answer is diversification. Family stewards—those who manage wealth and invest for future generations—should focus on creating a well-rounded portfolio that can weather any storm. Rather than betting on predictions, diversify your investments across a wide range of asset classes: large-cap stocks, small-cap stocks, international investments, emerging markets, real estate, and bonds.

By spreading your investments out, you position your portfolio to perform well under different market conditions, regardless of what the experts predict. Instead of trying to outguess the market, family stewards invest for the long term, with a strategy that includes a mix of assets to capture growth while minimizing risk.

By building a diversified portfolio, you are not relying on a crystal ball or hoping for the best. Instead, you are ensuring that you are prepared for whatever comes, from market highs to lows.

Can we trust stock market predictions? In episode 257 of Best in Wealth, we look at why relying on expert forecasts can be risky and how diversification can provide more stability for your financial future. Don’t gamble with your portfolio! Click To Tweet

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About the author, Scott Wellens

Scott Wellens, CFP® is an investment advisor and founder of Fortress Planning Group. After earning his Bachelor of Science degree from the University of Wisconsin-Oshkosh, Scott quickly ascended to become a Vice President of North American Sales at a major regional provider of telecommunications infrastructure. While financially successful in this role, Scott searched for ways to pursue his passion related to financial literacy and providing financial freedom for both his own family and others. During his search, Scott became curious about the significant gap he found in the financial services sector: he was unable to find a comprehensive financial planner that maintained a family stewardship lens without being attached to financial products. Scott decided to fill that gap by creating his own planning firm that maintains a strong passion for comprehensive, unbiased wealth planning that is genuinely client-centered.

Scott resides in Menomonee Falls, WI with his family. He is the father of three active and independent daughters who keep him on his toes. Scott is an active community member, serving on the Hamilton Education Foundation Board, serves as a Dave Ramsey Financial Peace facilitator and leads the All Pro Dad’s group at their local elementary school. Scott enjoys spending his free time visiting state parks with his family, reading, and watching the Milwaukee Bucks and the Green Bay Packers win ball games.

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