Cloudy Crystal Ball

As we start the new year, especially after a challenging 2022, the most frequent question we are asked is: What is your prediction for 2023?

Admittedly, our crystal ball is cloudy. It always has been and always will be when it comes to short-term predictions. Still, there is no shortage of “experts” – supported by research, sophisticated models, and persuasive reasoning – that routinely broadcast what’s in store for the next twelve months. The harsh reality: it’s fool’s gold – entertaining but rarely actionable.

Let’s look back at predictions from a year ago of where well-known banks thought the US stock market (S&P 500) would finish 2022[1]:

Morgan Stanley 4,400
Wells Fargo 5,200
Goldman Sachs 5,100
Bank of America 4,600
Credit Suisse 5,200
Citigroup 5,100
Average Prediction 4,933
Final 2022 S&P 500 Level 3,840

Ouch! The average prediction missed reality by over 1,000 points to the downside.

Let’s try a different group and predictive metric: the Federal Reserve and their “dot plot,” where they project the federal funds rate over the near term. At the end of 2021, the Fed anticipated the rate would be around 1% by the end of 2022, and market expectations agreed.

By March 31, 2022, however, the Fed’s estimate doubled to about 2% by year-end 2022. But the changing predictions didn’t stop there.

On May 4, 2022, Federal Reserve Chair Jerome Powell said, “A 75 basis point increase is not something that the committee is actively considering.”[2] Well, that didn’t last long as the Fed’s next four rate hikes (June, July, September, and November) all resulted in increases of 0.75%![3]

The reality is a lot changed over the first several months of 2022. Unfortunately, most news was negative, highlighted by Russia’s invasion of Ukraine, soaring inflation, and fears of a looming recession. As such, the prognostications referenced above looked foolish and obsolete rather quickly. In any short-term period, the combinations of variables and outcomes are seemingly infinite and impossible to pinpoint.   

As Hall of Fame baseball player and manager Yogi Berra once said: “It’s tough to make predictions, especially about the future.”

So, if short-term predictions rarely come to fruition – and when they do, it’s more luck than sustainable skill – why do so many people try? Human nature. Our brains are prediction machines, and it’s hard-wired into our DNA.

As with many human behaviors, it stems back to fight-or-flight. Uncertainty is frightening, which causes humans to seek the illusion of “certainty.” By anticipating the future, the brain can prepare the body for what’s to come. Chemical responses trigger fight-or-flight actions allowing us to devise plans to evade danger or take advantage of opportunities.

Given that, the deception of “certainty” is the root cause that fuels the human appetite for predictions…and from there, it’s a constant loop of analyzing and reassessing. While we can’t rewire our brains, we can acknowledge this shortcoming and choose to look at short-term predictions in a new light. 

With that in mind, we don’t pretend to know how 2023 will unfold. As long-term strategic investors (not tactical market allocators), we don’t attempt to make short-term predictions about interest rates, the economy, or markets.

However, we are hopeful that better days are ahead. Inflation is falling, the Fed is nearing the end of its rate hiking program, meaningful yield has returned to the bond market, and economic weakness is priced into markets. That’s not to say it’s clear sailing ahead and that things couldn’t get worse before they improve, but I’m a big believer in the quote: It’s never as good as it looks and never as bad as it seems.  






This article contains general information that is not suitable for everyone. The information contained herein should not be constructed as personalized investment advice. Reading or utilizing this information does not create an advisory relationship. An advisory relationship can be established only after the following two events have been completed (1) our thorough review with you of all the relevant facts pertaining to a potential engagement; and (2) the execution of a Client Advisory Agreement. There is no guarantee that the views and opinions expressed in this article will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Strategic Wealth Partners (‘SWP’) is an SEC registered investment advisor with its principal place of business in the State of Illinois. The brochure is limited to the dissemination of general information pertaining to its investment advisory services, views on the market, and investment philosophy. Any subsequent, direct communication by SWP with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of SWP, please contact SWP or refer to the Investment Advisor Public Disclosure website (

For additional information about SWP, including fees and services, send for our disclosure brochure as set forth on Form ADV from SWP using the contact information herein. Please read the disclosure brochure carefully before you invest or send money (

Financial Planning
How We Find Comfort in Uncertain Times: A Guide for Investors
In the ever-changing landscape of the global economy, investors will be navigating potentially unfamiliar waters during the last couple of months in 2023. Uncertainty seems to be the only constant, with markets fluctuating as geopolitical tensions are rising. Despite all the question marks on what will happen in the short-term, there are some things that can be done to help keep investors at ease.
Read More
David Copeland interviewed by RIA Channel
At the 2023 CAIS Alternative Investment Summit, SWP Co-Founder and Principal David Copeland sat down with RIA Channel’s Founder and CEO Julie Cooling to discuss how he uses alternative investments in client portfolios. You can listen to the interview by clicking below.
Read More