We have just entered a new year, and in this case as new decade as well, which means equity market forecasts are rolling in. But before you reveal your projection for 2020, it’d be wise to take note of the following.
Over the past 120 years, the calendar-year return on the Dow Jones Index has finished between 5 and 10% on just 10 occasions. Therefore, making an estimated return that is close to the long-term average, which for the Dow Jones is 7.4%, is unlikely to put you in the spotlight. In fact, you’re better off by predicting either very positive (>20%) or very negative (
So, when forecasting calendar-year returns, as useless as they may be, please take into account that the average return doesn’t exist.
