In the first half of 2018, large-cap stocks in the Standard & Poor's 500 index eked out about a 1% gain, closing Friday at 6% less than January's all-time high.
Small-cap stocks returned 7.6% in the first half while investors who bought into TV ads for gold and silver investments were sorely disappointed with their 4.3% loss in the first six months of the year.
Share prices in consumer discretionary and technology companies far outperformed the 10 industry sector indexes from January 2 through June 22, 2018. Telecommunications and consumer staples took a drubbing.
Also shown are the consensus forecasts of popularly-followed Wall Street strategists for each of the 10 industry sectors. The strategists' predictions were published in a December 11, 2017 issue of Barron's, a weekly financial newspaper.
Wall Street's "top" strategists, according to Barron's, did not favor the consumer discretionary sector which was a top performer in the first half of 2018, missing out on the double gains. However, the strategists did favor tech stocks which had very strong returns. The strategists told Barron's last December that they favored industrials for 2018; they lost 4.3% between January 2 and June 22, 2018, according to the latest available data.
For the first half of 2018, Wall Street giants' performance record shows a familiar pattern of randomness, reflecting the futility of forecasting sectors or styles instead of diversifying a long-term portfolio. Yet the Wall Street sales machine continues to spin predictions.
A call by a Wall Street firm, as notable for the colossus it came from as for the potential devastation it caused investors, is shown in the news clipping above. BlackRock, the world's largest investment company, told InvestmentNews' John Waggoner in April 2016 that stocks would return less than 5% annually over the coming five years. How is that turning out so far?
If you followed BlackRock's advice on April 19, 2016, you would have missed out on a run in the Standard & Poor's 500 close of 2100.80 on April 19, 2016 to the mid-year 2018 close of 2718.37 on Friday - a gain of 29.4%.
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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.