top of page

All Hat, No Cattle

Wall Street analysts: nice suits, fancy titles, glass offices. The great white-collared hoodwink.

As we say here in Texas — they're all hat, no cattle.

Every time Wall Street analysts publish new or revised forecasts, I go bananas. Why do we let them get away with this?

Our collective short memories as consumers, and the financial media's general unwillingness to call out bullshit, create an environment where analysts (in the role of stock market forecasters) are never held accountable to the question that really matters:

Does your past track record justify having current opinions?

And once again, Bloomberg just published Wall Street analysts' revised forecasts for the rest of 2023.

Translation of revised forecasts: the below firms made end-of-year forecasts in January, managed client portfolios according to these forecasts, and then reality happened, and six months later these firms now quaintly update their old forecasts with new forecasts...after seeing what actually happened so far. WTF.

Here are the numbers:

To align, as an example — at the beginning of the year, Goldman Sachs forecasted that the S&P 500 would go up 4% by the end of the year. Then it was already up 16% halfway through the year. So they changed their forecast to the S&P 500 being up 17% by the end of the year.

This is all done with a straight face, mind you. And by highly compensated people.

Now Goldman Sachs isn't stupid, but they're playing an impossible game. No one knows what the market will do in a single year. No matter how believable or trustworthy someone sounds, no matter how smart they are, or what charade they put on, there are simply too many variables. It's impossible.

If you're wrong, you're wrong. If you're right, you're lucky.

The only reasonable, client-oriented answer to what will the market do this year is this:

I don't know.

Will Wall Street ever change? Probably not. Annual forecasts are a deeply entrenched legacy exercise, disoriented toward client success but highly profitable for banks. It helps sell products and services. The job of analysts is to predict. If they're never held accountable (to what seems to me a reasonable requirement of having to "be decent at their job") — why would they stop forecasting?

All hat, no cattle. But money is money, and it flows into Wall Street because we let them get away with this.

Banks know exactly what they're doing. Why would they stop? No one willingly squats down while they're wearing spurs.

Investors should demand better.



My blog posts are informational only and should not be construed as personalized investment advice. There is no guarantee that the views and opinions expressed in my posts will come to pass. They are not intended to supply tax or legal advice and there is no solicitation to buy or sell securities or engage in a particular investment strategy.

bottom of page