The graph below is taken from Montier’s 2002 study. It shows evidence of returns compared with the average forecast of analysts (the so-called “consensus forecast”). Analysts as a group, change their opinions regarding the dynamics of returns only when the changes have already occurred. Lag time when the analysts “came around” is distinctly seen, starting from the time indicated by the oval. Morals in a bull market: “Don’t confuse brains with a bull market”. Morals in any market: “Count only on yourself. Save your self-respect – don’t listen to the analysts”.
Disclaimer: This article contains the opinions of the author. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service. Performance data shown represents past performance. Past performance is no guarantee of future results. No part of this article may be copied, distributed, transmitted or published without the prior written consent of the author.
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