Source: https://today.yougov.com/topics/economy/trackers/us-stock-market-expectations and Google Finance

Tool: Google Charts

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The only person less accurate in predicting stock prices than the average American is Jim Cramer.

As an extension of this, it'd be interesting to see the cross-correlation for other offsets in which public sentiment precedes the stock market outcome.

When the market is down people think it will stay down. When the market is up people will think it'll stay up. Plot reality vs perception and I suspect that lag will be evident.

I'm a little confused.

The question asked is "will the market be higher or lower 12 months from now." But the plotted line seems to be a percentage change in the market, not a yes or no answer.

I'm guessing the prediction is something like "higher" answers minus "lower" answers. But a bunch of people saying "higher" is different from a bunch of people saying "30% higher."

90 degrees out of phase, the cosine to the Stock Market's sine.

I dont think there's anyone or thing in the world that can intelligently speak to the performance of the Stock Market 12 months out.

It looks like the majority of predictions through the years are people just believing the current trend will continue and then changing their opinion when the market changes.

I'm confused what the difference between the blue line and the blue dots is.

As for your point though, see "probability matching"

What are the dots vs the lines in this chart?

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I think the lines are a filtered average?

It clearly looks like the predictions line is lagging and following the stock market line vs the other way around . The predictions seem to be of no value.

That's just the confirmation I need. All in 0 DTE SPY calls

The predictions seem to lag actual by half a year to a year. Good to know.

When the news reports say "analysts predict", I know how to value that information.

Bangs on a horn button

Which now sets the stage for the market to actually go down 🤦🏻‍♀️

You might still expect a correlation though. If the stock market is going to be a lot higher, you might expect that more people will say that it will be positive

This is only because of the nonstop news reporting in the coming “recession” that they are desperately trying to will into existence

Also, are the prediction results posted when the question was asked or when the prediction was based. I.e do I need to offset the prediction by 12 months to see if the prediction was accurate?

"Be Fearful When Others Are Greedy and Greedy When Others Are Fearful"

If you're wondering if it go up or down, the answer is always yes.

Great news, market usually does the opposite of what people expect

Total dataset r-squared = .06

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That figure tells me most Americans don’t know what they’re talking about when it comes to the stock market.

Kinda looks like people are like "it's down now, so it'll not changw in 12 months" most of the time. Like, most of graph is offset by 12 months...so people are just persistence forecasting on average when asked (or the average of the extreme predictions is persistence)

Shouldn't you have a measure of probability to say "no correlation" ? What if you are very certain (i.e. lots and lots of data) that there is a very small, but positive, correlation of 0.06? I've seen correlations of 0.001 that had a 95% confidence interval that did not include 0.

It's interesting that at a glance, the predictions seem not far off. But in reality, the predictions are just lagging behind market results by a few days which makes them absolutely useless.

I don't think so. Consider that the prediction comes out well in advance of the actual market change. I think the behavior of investors is driven by the prediction which sets off a self-fulfilling prophecy.

I'd imagine this is highly correlated to the fear index.

Are the returns stationary on this timeframe? When dealing with time series, especially non stationary ones, you should really be looking at their first (and potentially higher) order differences when computing correlations or R^2.

They are lagged a lot, most of them would lose tons of money.

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