If you made the mistake of tuning into the financial media over the last few weeks you likely witnessed perhaps modern man’s most useless ritual. I am speaking, of course, of the publishing of year-end price targets.
Every November and December, each big bank and Wall Street research firm publishes a price target – where they expect the S&P 500 will finish at the conclusion of the upcoming calendar year. Here is a list of a few of Wall Street’s top dogs’ 2024 year-end price targets published as 2023 came to a close. I have also included the percent gain or loss these targets implied for your amusement:[i]
J.P. Morgan: 4,200 (-11.9%)
Morgan Stanley: 4,500 (-5.7%)
Wells Fargo: 4,625 (-3.0%)
UBS: 4,850 (+1.7%)
Yardeni: 5,400 (+13.2%)
In the interest of brevity, I’ve only listed a few here. Rest assured nearly every bank and strategist was calling for either a substantial stock market decline or a relatively flat return in 2024. I specifically remember the disbelief that greeted Yardeni’s call for 5,400. Most considered it foolish. Some went so far as to imply recklessness.
So where did the S&P 500 finish the year 2024?
5,881.63 (+23.31%)
I could catalogue the shiny new 2025 price targets here, but wouldn’t that miss the point? These targets are worse than useless. J.P. Morgan is the most powerful bank in the world. They recently reported operating revenues in excess of $150 billion.[ii] They have $3,584,105,000,000 in customer deposits.[iii] Yes that’s nearly $3.6 trillion. If there is any institution that owns real time data placing its fingers directly on the pulse of the global economy and the income to pay the most brilliant minds in finance, it is J.P. Morgan. And they have absolutely no idea where the stock market will be in twelve months.
We will offer you one 2025 year-end price target:
Resolute Wealth Management: ???
We do not know how the markets will fare in calendar year 2025, and we will not waste your time disguising a wild guess as an erudite prediction. Nor, frankly, do we really care how the markets fare in 2025. Sure, we’d love a solid positive year, but we are playing the long game. And one-year returns have little impact on the long game. Most years will be positive, but some will be negative. Does it really matter which of those buckets 2025 falls into? We are in the business of building and managing portfolios tailored to the specific objectives of each of our clients, not transforming portfolios to bets on one-year returns. Each one of the portfolios and plans we steward anticipates negative years in the equity markets. We do not know when they will arrive, only that they will arrive. Additionally, market downturns are beautiful opportunities for patient, long-term investors. We eagerly anticipate the next year we can capitalize on such an opportunity. If your life will be impacted by the level at which the S&P 500 closes the 2025 calendar year – whether 4,000 or 7,000 – you do not have a plan. You have a problem.
While we can’t tell you where the markets will finish 2025 or even which direction the next 1,000-point move in the S&P 500 will be, we’re pretty certain the direction of the next 5,000-point move.
We look forward to participating in that move together.
Sean Cawley, CFP®
Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.
Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.
This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.
[i]https://www.tker.co/p/goldman-raises-2024-sp500-target
[ii] YCharts, JPM, Financials, 12-2023.