CFA LA Challenge Forecasters Put Low Odds of a Bear Market in U.S. Stocks

Posted on Posted in GJ Open

by Warren Hatch
President, Good Judgment Inc

In a new collaboration, Good Judgment and the CFA Society Los Angeles have joined forces to launch a forecasting challenge on Good Judgment Open. Nearly a thousand forecasters have already picked up the gauntlet to forecast on finance and economics questions that range from interest rates to tax policy to oil prices.

Already joined the challenge? Please fill out the Challenge Questionnaire to indicate if you’re a CFA charterholder, candidate, society member, a financial professional, or a non-professional financial forecaster.
Let’s take one of the most popular questions currently on the challenge: Will there be a bear market in U.S. stocks this year? The wisdom of the crowd gives 15% odds that the S&P 500 will fall at least 20% in 2017. Is that too high? Too low? About right?
A good way to start a forecast is to begin with an “outside view” and see how often the S&P 500 falls at least 20% in any given year. As forecasters at the Good Judgment Open have pointed out, U.S. stocks have crossed that threshold on average roughly every 5 years since 1929. That gives an initial base rate for a bear market occurring in any single year of around 21%, so forecasters are viewing a bear market as less likely this year.
Next, forecasters can shift to the “inside view” and take a closer look at the particulars of the current situation. For instance, the last bear market struck in 2007 during the global financial crisis. Stocks turned back up in 2009, so the current bull market is now in its ninth year and getting long in the tooth by historical standards. However, in an era of low interest rates and stock volatility at multi-year lows, some forecasters point out that the current bull market can carry on for a long time yet.
What do you think? Come join the discussion and make your forecast at the CFA Challenge on Good Judgment Open.

Here are a few more tips for getting started:

1. Watch introductory videos on how to get started forecasting at
2. Dive in. The best way to become a better forecaster is to practice and learn from your experience. You can refine your forecast as often as you like, so start with the information you have and update your forecast as you learn more.
3. Check out the comments of your fellow forecasters. And be sure to leave comments on your forecasts so others can challenge your reasoning.
4. Remember to fill out the Challenge Questionnaire to indicate if you’re a CFA charterholder, candidate, society member, financial professional, or non-professional financial forecaster.

The CFA Challenge is open to all who are interested in finance and economic forecasting questions. Join the Challenge today!

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