One of the themes dear to this section is the absolutely unpredictable side of financial markets in the short term.
However, it is difficult to find a field where predictions are more numerous and intensely followed than in finance and economics.
As 2023 comes to a close, I would like to revisit some predictions made a year ago. They cover a range of topics, including the trajectory taken by different stock markets, countries or economic sectors.
The idea here is not to make fun of bad predictions (OK, a little, anyway). It’s simply about ending the year on a lighter note. And to show that it is risky to give a lot of weight to predictions. Or – worse – to invest your money based on what they say.
RBC expects Canada to enter recession in early 2023.
RBC Economics Global Outlook 2023: Canada, December 2022
Result: according to data available in December 2023, Canada was not in recession in 2023.
Stéfane Marion, chief economist of the National Bank, does not believe that stock markets are necessarily more attractive in the long term, despite the 2022 correction […]. “With the uncertainty in Ukraine and Russia, we think it is more defensive to be exposed to Canada in the energy sector.”
The Canadian Press, December 2022
Result: as of December 15, the diversified fund which includes the major American, Canadian and international indices iShares Core Equity ETF (XEQT) was up 16% for the year 2023, including the reinvestment of dividends. Canadian energy fund iShares S&P/TSX Capped Energy Index ETF (XEG) was up 8% on the same date. The price of a barrel of oil is down 9% since the start of the year.
For the American S&P 500, Desjardins is banking on a slight rebound of 1.4% while BMO predicts that the index will simply tread water.
The Montreal JournalDecember 2022
Result: as of December 15, the S&P 500 was up 24% for the year 2023, including the reinvestment of dividends.
Thinking that techno will steal the show in the next 5 to 10 years is a mistake. This is not a sector to be heavily weighted. Especially not in 2023.
Daniel Ouellet, portfolio manager at Groupe Ouellet Bolduc, The PressJanuary 2023
Result: as of December 15, the NASDAQ technology index had increased by 42% in 2023, the stock index showing the best performance this year.
We need to lower our expectations of technology… […] The energy sector is not expensive and the outlook is very good for the coming years for the price of oil and therefore for company profitability.
Sébastien Mc Mahon, senior economist and portfolio manager at Industrial Alliance, Investment Management, The PressJanuary 2023
Result: as of December 15, the NASDAQ technology index had increased by 42% in 2023. The Canadian energy fund iShares S&P/TSX Capped Energy Index (XEG) was up 8% on the same date . The price of a barrel of oil is down 9% since the start of the year.
Markets are too optimistic […]. We’ve seen a lot of devaluation in 2022, so it may seem affordable to go public. But the fact remains that in terms of profit expectations, there is still plenty of weakness ahead.
Jimmy Jean, chief economist at Desjardins, to the newspaper DealsJanuary 2023
Result: as of December 15, the diversified fund which includes the major American, Canadian and international indices iShares Core Equity ETF (XEQT) had experienced an increase of 16% in 2023, including the reinvestment of dividends.
For the Toronto Stock Exchange composite index (S&P/TSX), the Bank of Montreal foresees growth of 7% while Desjardins predicts an increase of barely 2.4%.
THE Montreal JournalDecember 2022
Result: as of December 15, the S&P/TSX was up 10% in 2023, including the reinvestment of dividends.
Currently, we favor the small- and mid-cap segments of the U.S. stock market. […] Within the large-cap segment of the S&P 500, we continue to favor the energy sector.
RBC Economics Global Outlook 2023: United States, December 2022
Result: as of December 15, the fund iShares Russell Small/Mid-Cap index (BSMAX) was up 14% year-to-date in 2023, including dividend reinvestment. For the energy sector, the Invesco S&P 500 Equal Weight Energy ETF (RSPG) was up 4% on the same date, including dividend reinvestment. The S&P 500 as a whole was up 24%, including dividend reinvestment.
With these reflections, I wish you an excellent year 2024!
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.
Source: Tker