Wall Street unanimously bullish on US stocks, is the end of good news "bad results"?

Wall Street's Collective Bullishness: Is It a Clear Positive?

At the end of each year, top analysts from major Wall Street firms release their predictions for the future year's U.S. stock market levels.

According to a summary by TKer, this year, major investment banks generally predict the S&P 500 index to be between 6400 and 7000 points by the end of 2025, with a median around 6600 points. Based on the current level, an expected return of 8.5% is anticipated for next year.

However, Wall Street has also faced its share of "face-slapping."

For instance, last year, Wall Street predicted the year-end level for this year to be around 5300 points (with an expected annual return rate of 10%), while the actual level has already surpassed 6000 points, with a return rate close to 30%.

According to data from Truist IAG and FactSet:

1. Over the past 20 years, Wall Street's predicted annual return rates for the S&P 500 have aligned with actual annual return rates in 15 instances, yielding a success rate of 75%.

2. In years of overestimation, the average excess was 13 percentage points; in years of underestimation, the average shortfall was 8 percentage points. Moreover, the errors in the last ten years have been significantly greater than in the first ten years.

3. In years where the prediction direction was correct, the average time to achieve the return target was 7 months.

Considering that the U.S. stock market is still at peak absolute levels, investors' biggest concern is whether a "reversal of extremes" will occur, even though this is rare.

We can reference the tech bubble of the late 1990s as an example