What Market Pundits Got Wrong About 2024 | Wealthfront (2025)

Alex Michalka, Ph.D and Fang Rui, CFA•December 12, 2024

Each year, commentators and pundits try to forecast what financial markets will do in the future. And each year, many of those predictions are wrong.See AlsoThe nine events that defined 2024: A year of joy and sorrowThe 14 predictions that came true in 2024 — and the 10 that didn’tWhat a Year 2024 Was77 Facts That Blew Our Minds in 2024

In this post, we’ll look at three market predictions from the pundits that didn’t come true in 2024. We’ll also share some perspective about what those failed predictions mean for you as an investor.

1. The S&P 500® didn’t have a rough year.

Heading into 2024, some experts encouraged investors to temper their optimism about US stock market returns and to expect worse-than-usual performance. The year isn’t over, but with just a few weeks left in the year, it’s looking like these experts probably got it wrong. As of December 5, 2024, the S&P 500® is up over 27% year to date—more than double its average return (a little over 10% according to Investopedia) since its inception in 1957. And yet:

• Hedge fund manager Doug Kass predicted that the S&P 500® index would fall in 2024, potentially by 5-10%.
• BCA Research warned in late 2023 that the index could decline over 25% in the coming year.

What this means for you: If you had avoided investing in US stocks in 2024 because you thought you’d get lackluster returns, you would have missed out on returns that have (so far) been far above average. That’s why we don’t think you should try to time the market based on experts’ predictions.

2. The federal funds rate didn’t come down as much (or as quickly) as some experts thought it would.

This time last year, many people expected that the fed funds rate (and, as a result, other consumer interest rates and bond yields) would start to come down in 2024 as inflation continued to cool off. Directionally, this expectation was right, but the details were often wrong. Consider:

• Kiplinger predicted that cuts to the federal funds rate would happen during the first six months of the year, and that the Fed would avoid cutting rates in the fall because of the election. However, this turned out to be incorrect: The Fed held rates steady during the first half of 2024 and delivered a 50 basis point cut in the last FOMC meeting before the election.
• Morningstar predicted six interest rate cuts in 2024. While it isn’t yet clear whether we’ll end up with two or three rate cuts this year (with one FOMC meeting still to go before the end of the year), we know we definitely won’t end up with six by year’s end.

What this means for you: If you had tried to use interest rate predictions to time the bond market and generate outsized returns in 2024, you probably would have failed. As we’ve written before, it’s very tough to time the bond market because no one can accurately predict the future, and expectations about future interest rates are already priced in. Instead, we suggest investing in bonds when you decide they fit your risk tolerance and overall investment goals.

3. The US economy didn’t fall into a recession in 2024.

Recession predictions have been a dime a dozen in the years immediately following the Covid-19 pandemic. However, no recession (typically defined as two quarters in a row of shrinking gross domestic product) has materialized yet.

• Among the experts predicting a recession in 2024 was economist Harry Dent. Economist David Rosenberg put the probability of a 2024 recession at a notable 85%.
• The yield curve was inverted for much of 2024, which led many experts to predict a recession. While an inverted yield curve is often seen as a warning sign that a recession is imminent, no recession occurred in 2024 (although it’s always possible one could occur in the new year).

What this means for you: If you had stopped investing in 2024 because you feared a recession and wanted to build up an extra-large cash buffer, you likely would have suffered from significant cash drag this year. We think it’s smart to have an adequate emergency fund in case of a rainy day, but avoid going overboard based on pundits’ predictions.

Even if the US economy had entered a recession this year, we still think holding a globally diversified portfolio of low-cost index funds would have been a good strategy for building long-term wealth. Because this type of portfolio (like Wealthfront’s Classic portfolio, for example) has exposure to other asset classes beyond US stocks, it can be more insulated from the effects of a recession.

The takeaway: It’s hard to predict the future

It’s tempting to try to predict the future, but it’s not very helpful. The incorrect predictions in this post are a good reminder that it’s very difficult to determine ahead of time how financial markets will move.

That’s why at Wealthfront, we suggest investing in a globally diversified portfolio of low-cost index funds (like what we offer in our Automated Investing Accounts) and holding it for the long term. It’s a time-tested approach to building long-term wealth, no crystal ball required.

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S&P Dow Jones Indices LLC. Data as of December 5, 2024. Index performance based on price return in USD. Past performance is no guarantee of future results.

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About the author(s)

Alex Michalka, Ph.D, has led Wealthfront’s investment research team since 2019. Prior to Wealthfront, Alex held quantitative research positions at AQR Capital Management and The Climate Corporation. Alex holds a B.A. in Applied Mathematics from the University of California, Berkeley, and a Ph.D. in Operations Research from Columbia University. View all posts by Alex Michalka, Ph.D

Fang Rui is a Chartered Financial Analyst (CFA) and an investment researcher at Wealthfront. Prior to Wealthfront, Fang spent nearly a decade at BlackRock where she worked in ETF and index research as well as risk management. She earned a Master of Science in Industrial Engineering and Operations Research from University of California, Berkeley and earned a Bachelor of Science in Engineering with a major in Operations Research and Financial Engineering from Princeton University. View all posts by Fang Rui, CFA