With the markets opening for brand-new 2012 business today, it's time to stop looking back at 2011 and to begin looking forward to the coming year. Reuters polled 40 economists and found that the consensus predicted gain for the S&P 500 was just under 7 percent for 2011. A similar poll conducted by Bloomberg found an average predicted gain of 7.2 percent.
That would, of course, be a substantial improvement over last year, which as we've seen, was virtually flat. But it's also the smallest predicted gain from these surveys since 2005. Every year since then, economists have expected 7 percent rise in the markets or better - and of course, they've often been very, very wrong.
For example, the Bloomberg survey last year forecast a gain in the S&P of just over 8 percent. To be fair, that was the biggest miss by the Bloomberg survey since 2008, when it had its worst year ever, predicting a 7 percent gain in a year when the index ended up with a loss of 38 percent.
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