As the end of the year nears, many are wondering what is next for the markets. Are we headed towards new highs, or are we due for a correction? Over the next couple of weeks, we will witness many strategists forecast the 2020 year-end price level of the S&P 500. Thus far, most forecasts range from -4% to 10%, with the majority speculating that the S&P 500 will finish higher in 2020 than in 2019.

It is also interesting to consider the probability that these targets will actually be met, based on the historical annual returns of the S&P 500 (dating back to 1928).

A quick evaluation of the above forecast and probability tables suggests the following about the S&P 500 index:

• It tends to deliver positive returns more often than negative returns (73% vs. 27%).
• The probability of a negative double-digit return is lower (12%) than that of a positive double-digit return (56%).
• The probability of the S&P 500 index performing in line with analysts’ average and median is surprisingly low (10%).

This historical data should not be used in and of itself to forecast future market performance. Examining the past is just one piece of the puzzle when anticipating what 2020 will bring.