{"id":8358,"date":"2019-12-03T20:18:47","date_gmt":"2019-12-03T20:18:47","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8358"},"modified":"2022-02-26T13:07:05","modified_gmt":"2022-02-26T13:07:05","slug":"reacting-to-doom-and-gloom-stock-forecasts-may-cost-you","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/reacting-to-doom-and-gloom-stock-forecasts-may-cost-you\/","title":{"rendered":"Reacting to \u201cDoom and Gloom\u201d Stock Forecasts May Cost You"},"content":{"rendered":"\n<p>Investing in the equity markets means confronting a constant\nbarrage of economic, political, and financial information \u2013 with most of it tilting\nto the negative. Then there are times when prominent commentators up the ante\nand start to talk of \u201cArmageddon\u201d scenarios, forecasting economic ruin and\nusing phrases like \u201cthe death of equities.\u201d Many investors, understandably, get\nshaken up by such predictions, and in extreme cases might make a sudden\ndecision to switch from stocks to bonds or cash. <\/p>\n\n\n\n<p>But these sudden decisions to \u2018run for the exits\u2019 at the\nfirst mention of Armageddon are almost always wrong. That has consistently been\nmy opinion on the matter, but now there is actually research showing that heeding\nArmageddon predictions can lead to poor, negative performance. <\/p>\n\n\n\n<p>A recent study looked at Armageddon predictions made by over\n15 prominent financial thought leaders \u2013 from asset managers, to journalists,\nto the heads of major banks and hedge funds. These prognosticators and managers\nmade Armageddon predictions at various times over the last 10 years. <\/p>\n\n\n\n<p>Given that we know the stock market is near all-time highs,\nit\u2019s evident each prediction was wrong. But the study takes matters a step\nfurther, and examines the actual financial impact of moving $1 from the S&amp;P\n500 to the Barclay\u2019s Aggregate Bond Index at the time of doomsday prediction. <\/p>\n\n\n\n<p><strong><em>Heeding the doomsday predictions resulted in returns ranging from -25%\nto -60%.<sup>1<\/sup><\/em><\/strong> The fact of the matter: at any point in the last\n10 years, taking a call for Armageddon seriously would have proven costly, in\nmy opinion.<\/p>\n\n\n\n<p>_____________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\">Don\u2019t Let Headlines Get in the Way of Your Investments!<\/a><\/strong><br> \u00a0<br> As the data above shows, listening too much to negative headlines can be a costly mistake. So instead of getting caught up in the headlines, focus on hard data and economic indicators that could drive the market. To help you do this, we are offering all readers a first-look into our just-released December 2019 Stock Market Outlook report.<br> <br> This 22-page report contains some of our key forecasts to consider in 2019:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Stock market returns expectations for 2019 and 2020?<\/em><\/li><li><em>Forecast for the S&amp;P<\/em><\/li><li><em>What of slowing foreign growth?<\/em><\/li><li><em>Can the U.S. stock market rally stick?<\/em><\/li><li><em>Which sectors are hot and which are not?<\/em><\/li><li><em>What industries within those sectors most merit your attention?<\/em><\/li><li><em>Odds of recession<\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<br> <br><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\"> <\/a><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\">IT&#8217;S FREE. Download the Just-Released December 2019 Stock Market Outlook<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\">2<\/a><\/sup><\/strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\">\u00a0<\/a><\/p>\n\n\n\n<p>_____________________________________________________________________________<\/p>\n\n\n\n<p><strong>The S&amp;P 500\u2019s\nPerformance Reflects the Opposite of Economic Collapse <\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/2019-11-30-motm-image-1-of-1-1024x395.png\" alt=\"\" class=\"wp-image-8359\"\/><\/figure>\n\n\n\n<p><strong><em>Source: Federal Reserve of St. Louis<sup>3<\/sup><\/em><\/strong><\/p>\n\n\n\n<p>This study of Armageddon predictions over the last 10 years just\nreinforces what I\u2019ve been observing throughout my entire career and what I know\nfrom deep stock market research. When Russia tested an atomic bomb with an\nexplosion in 1949, and the Korean War started a year later, it surely felt like\nArmageddon was approaching \u2013 particularly with World War II just a few years\nbefore. But the S&amp;P was up +18.30% in 1949 and +30.81% in 1950. Kennedy was\ntragically assassinated in 1963, but the S&amp;P 500 rose +22.61% that year. \u201cBlack\nMonday\u201d in 1987 led to a precipitous -22.6% decline for the Dow, but <em>the market still finished positive that\nyear. <\/em>Fast forward to our current decade, and the 2008 global financial\ncrisis gave way to the longest economic expansion in history, with the S&amp;P\n500 near all-time highs. Long-term, it has not paid to think in doom-and-gloom\nterms.<\/p>\n\n\n\n<p>Since 1950, the S&amp;P 500 has been in the throes of a\ncorrection (-10% decline or more) for 7,135 days. That probably seems like a\nlot. But when you consider that there has been a total of 25,535 days (through\nNovember 30) since 1950, it becomes evident that the S&amp;P 500 has spent a\ngreat majority of the time trending higher. Looked at another way: <\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>7,135 days in correction mode<\/li><li>18,400 days in rally mode<\/li><li><strong>Equals\nthe S&amp;P 500 in rally mode 72% of the time.<sup>4<\/sup> <\/strong><\/li><\/ul>\n\n\n\n<p>You don\u2019t have to be a mathematician to see that forecasting\nArmageddon at any point throughout history has most likely meant being wrong\nabout it. The market rises far more often than it falls. <\/p>\n\n\n\n<p><strong>Bottom Line for\nInvestors<\/strong><\/p>\n\n\n\n<p><em>The history of the U.S.\nequity market is a history that favors long-term optimists<\/em>. It is not to\nsay that we should blindly trust the stock market will always go up, and that\nas a result it is not worth trying to identify trends and weaknesses across sectors,\nindustries, and individual companies. That\u2019s what we do every day. <\/p>\n\n\n\n<p>But it is to say that heeding Armageddon predictions is very\nrisky, and, as shown above, has a low probability of success. The next time you\nencounter a doom-and-gloom forecast, remember these lessons from history and\nstay focused on the hard data. <\/p>\n\n\n\n<p>To help you do this, I invite you to\u00a0<strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2019_12_2&amp;content=stock_market_outlook_report\">download our Just-Released December 2019 Stock Market Outlook Report.<\/a><\/strong><br> <br> This Special Report is packed with newly revised predictions for the remainder of 2019 and 2020 that can help you base your next investment move on hard data. For example, you&#8217;ll discover Zacks\u2019 view on:\u00a0<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>Stock market returns expectations for 2019 and 2020?<\/em><\/li><li><em>Forecast for the S&amp;P<\/em><\/li><li><em>What of slowing foreign growth?<\/em><\/li><li><em>Can the U.S. stock market rally stick?<\/em><\/li><li><em>Which sectors are hot and which are not?<\/em><\/li><li><em>What industries within those sectors most merit your attention?<\/em><\/li><li><em>Odds of recession<\/em><\/li><li><em>And much more.<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<sup>5<\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>With all the talk of recessions and corrections, it\u2019s worth reflecting on long-term stock trends<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-8358","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8358"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8358\/revisions"}],"predecessor-version":[{"id":10675,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8358\/revisions\/10675"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}