The proverb not suitable for retail investors which is used by institutional investors is “never follow a bank forecast.” Also, one can view the Dax forecasts of banks in recent years as a good counter-indicator, as they are often completely wrong. So also this year. We now make an overview where selected banks predicted the Dax for the end of 2017 a year ago.
Deutsche Bank 11,300
BNP Paribas 12.300
Credit Suisse 11,800
Hamburger Sparkasse 11,500
Sal Oppenheim 11,900
Societe Generale 12,000
Bavarian Landesbank 12,000
Several banks, such as Deutsche (in March to 12,800) had raised their forecasts during the year. Within three months, Germany leading Bank increases from 11,300 to 12,800. Somebody probably misjudged the impact of the Trump election! After all, the predictions of a year ago remain crucial in order to be able to see how well the banks are doing with their full-year estimates.
And when we summarize the 13 forecasts shown above, and create an average estimate, one arrives at a Dax forecast for 2017 of 11,753 points. That’s just 272 points or 2.37% profit confidence for the full year 2017. So far, however, the Dax has increased by 1586 points to the current 13,067 points. Assuming that he will end there about in a week, that would be an annual increase of 13.8%!
So the banks were really wrong with their + 2.37% expectation. One probably interpreted the election of Donald Trump completely wrongly. But even without Trump, the banks in previous years were always well off with their forecasts! Let’s see what the forecasts for the coming year will be.