Do you know the story of the two young fish who come across an old fish?
Published at 8:00 a.m.
Two young fish swim in the ocean. An old fish happens to pass by and says to them: “Hello guys! The water is good today, isn’t it? ”, and continues on his way.
A few minutes later, one of the young fish looks at the other and asks: “What is water?” »
This story sums up the world of economic predictions well.
Economic predictions are everywhere. They influence our emotions. Our view of the world. Our decisions to invest, or not to invest.
We swim in a world of predictions. But we rarely take the time to evaluate them.
As 2024 draws to a close, I would like to take stock of what market experts were saying a year ago.
Interest rate increases are always followed by an economic slowdown or recession. There was never such a thing as a soft landing.
Martin Lefebvre, strategist and chief investment officer of Banque Nationale Investissements, The PressOctober 17, 2023
Reality : If we had received a dollar for every time an economist predicted a recession in recent years, we would be richer than Elon Musk today. Well, maybe not. But one thing is clear: there was no recession in 2024. Neither in Canada nor in the United States.
Analysts Stéfane Marion, Matthieu Arseneau and Alexandra Ducharme, from National Bank Financial, predict a sharp stock market fall [en 2024]. [Ils] see the main index of the New York Stock Exchange, the S&P 500, falling to the level of 3800 points.
The Montreal JournalSaturday December 30, 2023
Reality : Stocks were up sharply in 2024. Buoyed by an increase in profits, the American stock market rose 28.5% in 2024, as of December 13. The index value exceeds 6000 points.
Our algorithms tell us that volatility will remain quite high over the coming months. This is characteristic of an environment of economic contraction. […] Losses are expected over a longer horizon.
Alexandre Hocquard, vice-president, Fiera Capital, Business1is December 2023
Reality : The algorithms need an update. Stock market volatility has been below average in 2024. Markets have been in bullish mode almost all year. The S&P 500 has closed at a record high 57 times this year as of Dec. 13, one of its best performances in decades.
The economic rebound that we anticipate in 2024 should enable a return of above 10% [pour la Bourse de Toronto]. […] In the United States, enthusiasm for artificial intelligence is starting to wane. We continue to expect the S&P 500 to decline.
Jimmy Jean, vice-president, chief economist and strategist, Desjardins, September 28, 2023
Reality : Finally, a good prediction! Or, rather, a third of a good prediction… The Toronto Stock Exchange has increased by 24% this year as of December 13. But the enthusiasm for artificial intelligence has not diminished, with a 175% increase in the stock of giant Nvidia this year. And, as we have seen, investors who counted on a decline in the S&P 500 have missed a lot of growth in 2024.
According to the results of a Reuters poll, the median forecast of 23 Canadian portfolio managers and strategists was that the S&P/TSX Composite Index would advance 2.5% in 2024.
Reuters, February 21, 2024
Reality : The S&P/TSX, the flagship index of the Toronto Stock Exchange, increased by 24% in 2024. Growth nine times greater than the consensus of experts surveyed by Reuters.
Stock market correction: it’s not over!
The Montreal JournalAugust 6, 2024
Reality : It was over! After a brief fall in the middle of the year, the Canadian and American markets resumed their upward march. They have climbed 16% since the start of August.
At the start of each year, financial firms around the world try to predict the value that the S&P 500, the flagship index that represents the American stock market, will have one year later. Here are the results.
What is my goal in publishing this article?
My goal is to make you smile. And also to make you realize that no one knows the future.
If even the greatest financial experts fail to sustainably predict the trajectory of financial markets, our chances of succeeding are zero.
We should never, ever try to time ourselves with the markets. Or let economic predictions influence our investment choices.
With these reflections, I wish you an excellent year 2025!
