Before placing too much trust in market predictions for 2025 from prominent strategists, consider this: even Wall Street's most astute minds can make incorrect forecasts. The average projection among 15 widely followed Wall Street strategists is 6,630 for 2025, representing approximately a 10% gain next year, according to CNBC Pro's Market Strategist Survey. This projected return aligns with the historical returns of any given year for the broader market.
However, Juan Correa, strategist for global asset allocation at BCA Research, cautions against the Street's outlook, stating that the range of forecasts is overly narrow. More significantly, he emphasizes that the market rarely produces average returns. 'A paradox exists in equity markets: Average returns do not occur often,' Correa stated in a note to clients titled 'Average Is Rare - Why Most S&P 500 Targets For 2025 Will Probably Be Way Off.' Typically, the S&P 500 tends towards extremes, Correa wrote. Analyzing the S&P 500's total annual returns since 1926, the market has only achieved returns within the average target set by sell-side firms approximately two out of every five years, or 40% of the time, according to BCA Research. Excluding the outliers – the top two and bottom two forecasts – this figure drops to just 17%, indicating that strategists are correct less than one year in five. This is why BCA Research anticipates the equity benchmark to be more likely to either fall below 5500 or rise above 7100, rather than remain within the Street's projected range. 'As a result, our negative view will either be spectacularly right or spectacularly wrong,' Correa stated. According to CNBC Pro's Market Strategist Survey, the highest target comes from John Stoltzfus at Oppenheimer, who projects the S&P 500 reaching 7,100 next year. The lowest target is 6,400 from Jonathan Golub at UBS