Most investors are terrible stock market forecasters

Most American's surveyed think that it is unlikely that stocks will be higher a year from now. The survey conducted by the New York Fed shows that, on average, people see just a 39.9% probability that stocks will be higher in 12 months. I can see how, on the surface, some investors might think this way. The stock market has been significantly up lately, and valuations are above their long-run averages. We'll have to wait a year to see if the people surveyed are correct. Historically, however, these investors have often been proven wrong. Since this survey was created in 2013, there's only been one instance where the average probability went above 50%, which means consumers have almost always been wrong about which direction stocks are headed. We can see that while stocks don't always go up, breaking this down. They usually do. Just take a look at this chart of the S&P 500.

Of course, there's been some volatility. We saw a correction in late 2018 and another crash in early 2020. But, you don't have to be a rocket scientist or a Ph.D. in mathematics to see that the trend line is definitely moving upwards. Now, this is where I have to mention that past performance doesn't guarantee future results. But looking all the way back to 1950, there has been an over 74% chance that the S&P 500 would be higher one year later. Be wary of those gut feelings when it comes to your investments. Attempting to "cash-out" too early can cause your investments to underperform most financial asset classes. While the bears have some wins, I still think the Bulls have plenty of runway.

Andrew Graham Editor, Silver Ridge Market Report P.S. If you are interested in learning more about tech stocks from a firm that called Bitcoin in 2015 (before it shot up 100x), I urge you to check out this interview. I think it is valuable information for current investors or if you are thinking about getting back into the market.

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