Expert perspective

In market-forecasting, longer horizons help

January 24, 2023

Kevin DiCiurcio

Head of Vanguard Capital Markets Model® Development

Market forecasts: Better to consider longer periods
The futility of short-term market forecasts

Analyst forecasts of 1-year S&P 500 Index levels versus actual returns

A chart shows Wall Street analysts’ forecasts of one-year price returns for the U.S. stock market, as represented by the S&P 500 Index, for the calendar years 2011 through 2022. For each year, the chart displays the highest, lowest, and median forecasts, and the actual market return. Seventy-five percent of the time, the actual price return fell outside the high-low range of forecasts. Specifically, the actual return was lower than the lowest forecast in 2011, 2015, 2018, and 2022 and exceeded the highest forecast in 2013, 2014, 2017, 2020, and 2021.
Wall Street knows that stocks are risky, right?
Why Vanguard market forecasts consider 10-year horizons
In forecasting, valuations matter
The accuracy of Vanguard market forecasts
We’re proud of our forecasts’ accuracy

Forecast versus actual 10-year annualized returns for globally diversified, balanced portfolios

A line graph shows the rolling 10-year annualized return of a hypothetical portfolio invested 60 percent in stocks and 40 percent in bonds for periods ended between 2011 and 2022, as well as our range of expectations. The returns fluctuated between a little more than 4% and about 9% and remained mostly in the expected range. As of September 30, 2022, the return stood at 5.5 percent. For most of the decade to come, we expect returns for this portfolio to ease toward 4 percent before rising late in the period. Ten years from now, we expect a 10-year annualized return of about 4 percent to 8 percent, with a forecast media of about 6 percent.
Vanguard Information and Insights

Subscribe to Economics & markets.

Get Vanguard news, insights, and timely analysis on the market, delivered straight to your inbox.

Read our privacy policy to learn about how we keep personal information private.

* Indicates a required field

Vanguard Information and Insights

Thank you for subscribing to Economics & markets.

You'll be notified when new content is published, but will only ever receive one email a day from Vanguard Insights.

Vanguard logo

Vanguard is the trusted name in investing. Since our founding in 1975, we've put investors first.