Former Fed Chairman Alan Greenspan was quite opinionated on our ability to forecast capital markets. He is known to state that we aren’t very good at forecasting, but we have no choice but to forecast since every position we take implies a forecast. He even goes so far as to say that a forecast, by virtue of its presence, changes the environment such that it creates an arbitrage situation impacting the forecast.
The previous thoughts notwithstanding, this is the time of year when all the investment thought leaders put out their forecasts for the coming year. It is always interesting to see what themes emerge and to parse out the nuggets that stand out. I am always fascinated about how wrong these forecasts can be, however. For example, the Wall Street Journal last year famously showed a survey of economists where EACH AND EVERY ONE “wrongly” predicted higher rates in 2019 (see my previous blog post here: https://www.dattilioash.com/our-blog/2019/6/13/interest-rate-forecast-foible).
This year, Wells Fargo Investment Institute came out with their fairly modest view for 2020. Following is a table of the big highlights:
You can read the full report yourself here, if interested: https://d2fa1rtq5g6o80.cloudfront.net/wp-content/uploads/2019/11/6600703_WIM-CM_Q3_WFII-2020-Outlook-Report-Paper_A1_F1_a11y_reduced.pdf.
It is good reading and tells a good story, but will 2020 play out as forecast and produce good capital market returns? As I have re-counted before, “Beats Me!” But, I will be watching closely!