Post-event analyst forecasts — those made subsequent to recent results or management guidance — are significantly more accurate than management forecasts, reports Jeremy Monk. And if analysts can provide insight into tangible measures of value, then we can presume they are also able to offer insight into other, less tangible measures of value, such as management quality and industry outlook.
“It is not only a low interest rate world, it is also a low expected return world on any long-only investment,” said Antti Ilmanen, in his presentation at the 2016 CFA Institute European Investment Conference. Low expected returns are going to anchor bad news for all of us for the rest of our working lifetimes, he said, and maybe beyond.
Research confirms a “wisdom of the crowds” effect insofar as only a few analysts seem able to consistently outperform the consensus forecast compiled from many different analysts.
One of the purposes of the Essential Listening series is to help in discovery, says Tadas Viskanta of Abnormal Returns. Among the challenges facing professionals, including those of us in the investing field, is finding new and interesting content.
Today, it's hard to remember Enron as anything but a classic example of hubris and fraud. But the market didn't always know that. A recently revealed Bear Stearns research note shows just what the market thought of Enron in the heady days of early 2001.
Why bother with long-term return expectations? For asset owners or asset managers compiling a strategic asset allocation, long-term forecasts are relevant and necessary. When combined with estimates for risk and correlation, these forecasts allow investors to fine-tune their long-term benchmarks and consider trade-offs between asset classes to enhance the implied risk and return profile of the fund.
Wall Street Journal columnist Jason Zweig recently wrote of a truism that is rarely acknowledged within the investment industry: Wall Street market forecasts offer little to no value. While it may be a fruitless exercise, hearing the prognostications of acknowledged market experts remains a guilty pleasure of many investment professionals, which may explain why nearly 1,000 of them turned out last week for CFA Society Toronto’s 58th Annual Forecast Dinner.
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