To The Moon

Wells Fargo recently upgraded its year-end forecast for the S&P 500, now expecting the benchmark index to finish the year between 6,600 and 6,800 points, up from its previous projection of 6,300 to 6,500. Based on the midpoint of these ranges, that implies a potential gain of over 4% from current levels—a notable bullish signal.

Personally, I think Wells Fargo’s forecast is certainly possible. After all, the S&P 500 isn’t far from these levels today. But rather than feel reassured, this actually makes me more cautious. Historically, when the market is bullish and momentum is high, that’s precisely when I try to step back and evaluate my risk. As Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful.” Right now, I think it’s time to embrace a little fear.

S&P 500 (.SPX)

This doesn’t mean I expect a crash tomorrow or that I’m betting against new highs but it does mean I want to prevent impulsive decisions. Markets can keep climbing for longer than logic suggests, and there’s nothing wrong with the S&P 500 hitting new highs. Yet, preparing for the possibility of a bear market in the near future feels like a prudent approach.

As for interest rates, I’m wary of trying to predict whether the Fed will cut rates once or twice in 2025. Market timing on monetary policy is notoriously unreliable. That said, a rate cut is generally positive for stocks, providing liquidity and potentially boosting valuations. But instead of relying on forecasts alone, I prefer to balance optimism with caution, planning for gains while protecting against potential downturns.

While Wells Fargo’s upgraded target suggests upside potential, it also reminds me that caution is just as important as optimism. I want to be positioned to benefit if the S&P 500 reaches new highs, but also prepared if volatility or a downturn hits unexpectedly. In a market driven by both opportunity and uncertainty, the key isn’t trying to predict every move—it’s keeping emotion in check and making decisions based on both probabilities and protection.