Wall Street Has Not Been This Wrong Since 2008

Wall Street was once again, predictably, caught completely by surprise and off guard by the ongoing plunge in the market.

The chart below shows the point delta between the average sell-side consensus S&P500 forecast and the actual level of the S&P500. Clearly, the Delta has never been greater.

(Click on image to enlarge)

Of course, with the S&P well in the 2,000 point range, the point difference reflects the absolute (high, for now) level of the S&P500.

What about on a ratio basis? Well, here too the delta has exploded in recent weeks, although it is still just shy of the record spread achieved during the financial crisis.

(Click on image to enlarge)

What does this mean? Absent a sharp and quick rebound in the coming weeks, expect Wall Street, which only recently came out with their euphoric 2019 market forecasts, to admit they were all wrong and to start slashing their forecasts for the coming year, adding even more downside pressure as plain vanilla funds no longer have sell-side analysts target to hide behind.

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William K. 9 months ago Member's comment

Perhaps making business decisions based on panic-driven emotions is a poor choice?? Do you suppose that the stress level of intense panic can lead to errors in choices???

David J. Tanner 9 months ago Member's comment

I thought the market has since turned around. Didn't it just increase by a record 5%?

John Fitch 9 months ago Member's comment

That was yesterday. Today there was a huge plunge. Worst sicne the depression!

Thorgood 9 months ago Member's comment

The markets are acting VERY irrationally right now. To adjust or make any prognostications for 2019 based on this activity is pure lunacy.

Leslie Miriam 9 months ago Member's comment

It's been downright scary. Worst Christmas since the Great Depression!