Yearly Financial Predictions Are Rarely What They Seem
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Yearly Financial Predictions Are Rarely What They Seem


It's nearly the beginning of a new year, and you know what that means! All of the financial "experts" are making forecasts for 2023. We must acknowledge that many of the predictions made at this time of year are at least intriguing. However, there is little sense in the activity. Why, you ask? Simply put, history and extensive studies have demonstrated no one can predict the course of the markets six months or even a year in advance with precision and reliability.

A Look at the Past

The US government creates 45,000 future financial indicators each year, while independent data companies provide over 4 million. Many people in the financial sector rely on these indicators to predict where the market is headed. However, these estimates are only guesses, like the indications on which they are based. Consider the following historical incidents that prove our inability to predict the markets annually:

  • Wall Street strategists predicted that the S&P 500 would close around 3,800 in 2021. The index finished the year at 4,766.18, with a margin of error of around 25%.

  • A year ago, Wall Street expected the S&P 500 to reach 4,825 by the end of 2022. However, the index is sitting around 3,850. In other words, a year ago, strategists predicted that 2022 would be a good year for stocks. We all know that hasn't been true.

  • In November 2007, economists polled by the Philadelphia Federal Reserve's Survey of Professional Forecasters predicted 2.4 % growth in 2008, with just a 3% likelihood of a recession. Furthermore, there was a 1 in 500 chance of GDP declining by more than 2%. The GDP would go on to decrease by 3.3%.

  • Even after the three most recent recessions had started in 1990, 2001, and 2007, most economists failed to "predict" them.

  • ​​Since 1990, economists have predicted only 2 of the 60 global recessions that have happened a year in advance. That’s an accuracy of about 3.33%.

Looking to the Future

Wall Street analysts are now predicting a flat year in 2023. The S&P 500 is expected to close the year around 4,009, not far from its present level. However, this may not be the case because there have seldom been two terrible years in a row. Regardless, let's assume it is correct. If so, you can be confident that it will be by luck, not because of magical information about 2023.


Nobody could have predicted that Vladimir Putin would command Russia's invasion of Ukraine this year. That fossil fuel corporations would lead the stock market in 2022. That the Coronavirus pandemic, which began in 2020 and resulted in 6.6 million deaths, would have such severe financial consequences. These events, and many others, are just unforeseeable. As a result, we can be confident that massive developments will occur in 2023 that will positively and negatively affect the markets.

What Can You Do?

The inability to predict the future is a fact of existence. Guessing or betting rashly is not a wise strategy. Instead, you must have a solid and diversified plan. Hedge your bets so that you are prepared whether specific markets rise or fall and can be ready to endure periods of loss such as those in 2022. This technique has been tricky this year, but it will pay off in the long run. Your prospects of thriving are far better if you remain modest, invest in the overall stock and bond markets, and stick with it for the long term. That forecast is the most accurate.

Start 2023 With A Plan

Instead of predicting what may or may not happen with the markets in 2023, it's time to consider your specific goals. The best way to plan for everything you hope to achieve is to develop, implement, and monitor a strategy designed to address your individual situation. Here at Fourth Avenue Financial, that is exactly what we do. So, if you are ready to start working towards a secure financial future, we are here to help. Contact us today at (304) 746 7977 to schedule a meeting with one of our experienced financial advisors or schedule online: https://calendly.com/fourthavenuefinancial/introductory-zoom.

Securities are offered through J.W. Cole Financial, Inc. (JWC) Member FINRA / SIPC. Advisory Services are offered through J.W. Cole Advisors, Inc. (JWCA). Fourth Avenue Financial and JWC/ JWCA are unaffiliated entities.


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