2016 Stock Market Predictions

As 2015 comes to a close, large Wall Street banks release their market predictions for 2016 – the article below does a great job of summarizing these predictions.  After reading these predictions year after year, one realizes that the predictions are often very close to each-other.  In other words, none of these big banks wants to “rock the boat” by predicting a +20% year or a negative year.  Often, up 5 %to 7% is the consensus.

What is interesting about this years predictions is that they are the most “bearish” in a very long time.  Most banks are predicting a flat to slightly positive year in 2016.  Should this give investors pause?  Not necessarily.  The US stock market could easily be up 20% this year as stocks continue to rally and the big banks scramble to reverse their bearish positions by buying equities.  However, stocks could also have a negative year in 2016 – proving the big banks, and their research departments, wrong again.

My bet – bet against the consensus.  I am looking for a big up year or a big down year in 2016.  Betting against the big wall street banks is an easy trade – positioning your portfolio for “outside of consensus” outcomes is the difficult part.