January… ’tis the season for forecasting, and for planning… which means it’s the best time of the year to pretend you know what’s going to happen. Or better yet, to argue with other people on CNBC about what you’re sure is going to happen.

And that means we should note, if for no other reason than to provide a public service, that 2023 was one of the years during which the forecasters were most extravagantly wrong… though being wrong is not at all a surprise. The biggest hedge funds mostly trailed the S&P 500 in 2023, often pretty dramatically (many of the most successful big ones had ~10-15% gains while the market returned about 24%, and David Einhorn, for example, has been celebrated for “being back” because his Greenlight Capital had a 22% return, almost matching the market). Almost nobody was positioned for a hugely spectacular year in the stock market, whether due to NVIDIA’s signals about the booming AI hardware market or rising optimism that interest rates would stabilize or whatever else.

Things always seem obvious and easy in retrospect, but after a terrible 2022, investors — myself included — were pretty inclined to expect that 2023 would be more of the same… or maybe even something much worse, many of us feared the possibility of the second leg of a bear market that really washes everyone out and feels like 2009. The only high-profile analyst/strategist who came pretty close to nailing the estimate of S&P earnings for 2023 was Tom Lee, as far as I can tell, most analysts were forecasting a 10-15% drop in earnings and a fall in the S&P 500.

Now? Well, earnings came in much better than expected, in some small part because NVIDIA, a large component of the S&P 500, had a wild breakout earnings year… and inflation fell dramatically, and interest rate expectations dropped, and that meant stocks were free to trade up to higher multiples. So higher earnings, and an inclination to value stocks at a higher multiple of earnings… which means a big surge in stock prices.

After all that, investors have been just about as bullish as can be. The “Fear and Greed” index has been firmly in “Greed” range for months (though it has dipped from “Extreme greed” as the market has started the year down a hair). The VIX, which is a measure of the ...