Finance

Historical returns show Wall Street was wrong about 2024 forecasts, and stocks are set for more big gains


Traders work on the trading floor of the New York Stock Exchange (NYSE) on March 5, 2020 in New York City, United States.Andrew Kelly/Reuters

  • Fundstrat’s Tom Lee says Wall Street is too pessimistic about the outlook for stocks in 2024.

  • He pointed to the historical distribution of annual stock market returns.

  • Since 1900, the S&P 500 has gained 10% or more annually 51% of the time.


Wall Street is too pessimistic about stocks heading into 2024, according to a report Friday from Fundstrat’s Tom Lee.

He highlighted the historical distribution of annual stock returns since 1900, which shows that stocks rose 10% or more 51% of the time. This year is heading in that direction, with the S&P 500 up 17%.

but, Wall Street analysts’ predictions for early 2024 Suggested returns next year are flat or in the low single digits. But Lee said that was inconsistent with history.

Since 1900 (year 123), annual equity compensation has been distributed as follows:

  • S&P 500 between 0% and +5% — 11%

  • S&P 500 range -5% to +5% — 17%

  • S&P 500 greater than +10% — 51%

S&P 500 Index ReturnsS&P 500 Index Returns

Fund strategy

“The point we want to express is that flat S&P 500 Index “This is the most unlikely outcome, with only a 1 in 10 chance of happening. However, this is what sellers and investors expect. To me, this is why 2024 will be a very decisive year,” Lee explain.

Early predictions for the stock market in 2024 Including Morgan Stanley’s S&P 500 price target of 4,500 points, represents a fixed return, and Goldman Sachs sets S&P 500 price target at 4,700representing only 4% potential upside.

Meanwhile, a Fundstrat poll of more than 1,000 investors among its client base showed that 51% of respondents expected the S&P 500 to rise between 5% and 10% in 2024.

These 2024 stock market forecasts show that there is still a lot of skepticism among investors, which is evident in the money flow data. Data comes from S&P Global, In October, retail investors sold U.S. stocks at the fastest pace since 2021.

“To me, it really speaks to the capitulation that peaked on October 27th of this year. We know that when investors capitulate, even if the data that is coming out seems less supportive, it makes the stock market more supportive. Big room for growth,” Li explained.

“As for why investors are skeptical, to me it involves a post-cyclical view: Those who are skeptical believe that the U.S. economy is in a late-cycle, so a near-term investment-wide recession is a certainty. If anyone has The view is therefore that unless growth accelerates, nothing can stop this,” he added.

but Growth based on corporate profits began to accelerate, Excluding the energy sector, S&P 500 earnings per share grew 11% in the third quarter, the fastest growth in two years.

For his part, Lee will release his predictions for 2024 early next month. But he is already optimistic about the final weeks of 2023, predicting that the S&P 500 will test a record high and rise 7% to 4,800 between now and the end of the year.

Read the original article business insider



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