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Bulls versus Bears: Who Will Rule the Stock Markets in 2019?

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Strategists’ predictions in 2018

Most of the analysts’ predictions were wrong based on the stock market’s wild ride in 2018, especially during the fourth quarter. In January, the median of equity strategists’ predictions for 2018 was a value of 2,893 for the S&P 500 (SPY). The median implies that strategists overestimated the S&P 500’s year-end value by ~15%.

In the fourth quarter, the S&P 500, the Dow Jones Industrial Average Index (DIA), and the NASDAQ Composite (QQQ) fell 14%, 11.8%, and 17%, respectively. The major market concerns leading to the sell-off included uncertainty surrounding the trade conflict between the US (IVV) (AAPL) and China, the Fed’s rate hikes, the expected deceleration in earnings and margins in 2019, and concerns regarding the global slowdown.

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Bullishness continues in 2019

Analysts’ bullishness for 2019 continues unabated despite the stock markets’ disastrous run in the fourth quarter. According to Bloomberg, all of the 22 strategists tracked by Bloomberg see higher prices for the stock markets in 2019.

Series overview

In this series, we’ll discuss equity market strategists’ target price for the S&P 500 in 2019. We’ll also discuss what’s driving their outlook. We’ll see which factors could alter their view going forward. Investors should note that strategists usually overestimate the stock market’s performance. They haven’t predicted a down year for the markets since 1999. Investors should take strategists’ target prices with a pinch of salt.

Next, we’ll discuss Goldman Sachs’ (GS) forecast for the markets.

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