First, I looked at their interesting chart which shows the top 10 stocks in the S&P 500 whose price at the start of 2015 was most significantly below its aggregate analyst price target.
No, I did not reverse the signs....they actually were THAT bad! They had the average % return correct.....JUST IN THE WRONG DIRECTION!! Remember folks....the S&P 500 returned +1.4% in 2015, if you equal weighted all 500 stocks it still would have been only -2.2%. It's quite a feat to do this badly.
How about the stocks whose aggregate price targets were most BELOW their starting price in 2015? The stocks they thought would do worst?
Here, on average, they expected these stocks to decline -12.1%. And the results?
Well atleast the average fall was close but what I hope your noticing is how much BETTER these did then those expected to perform best. Not only that but this group actually included 4 stocks that were positive and 6 stocks that performed better than the equal weighted S&P 500.
Lastly, how about just a bottom up look at expected sector returns? What were they saying in 2015?
Ok, so they were expecting 6.8% for the S&P and it returned 1.4% but what about if you want to use this to overweight some sectors? How about if you just equal weight the top 5 sectors (Energy, Materials, Industrials, Telecom & Health Care)? That would give you an expected return of 10.0%. Results?
Terrible, enough said.