Surprise! Wall Street Analysts Are Too Optimistic : Planet Money Wall Street analysts -- the ones who predict how stocks will perform -- are habitually overconfident. Everybody knows this. Still, this graph that Harvard Business Review published today is worth a look.
NPR logo Surprise! Wall Street Analysts Are Too Optimistic

Surprise! Wall Street Analysts Are Too Optimistic

Wall Street analysts — the ones who predict how stocks will perform — are habitually overconfident.

Everybody knows this.

Still, this graph that Harvard Business Review published today, based on data from McKinsey Quarterly, is worth a look.

It shows that analysts' projections almost always overestimate the growth of corporate profits. On average, over the past 25 years, analysts predicted that the earnings of companies in the S&P 500 would rise by 13% per year. Instead, they rose by 7% per year.

hbr
(HBR/McKinsey)