Thursday, July 22, 2010

Analyst estimates - reality check!

Economix points to McKinsey research which highlights the wildly over-optimistic nature of earnings-growth estimates of equity analysts for the past quarter century - ranging from 10-12% annually, compared with actual growth of 6%!



Only in years of strong growth, such as 2003 to 2006, when actual earnings caught up with earlier predictions, do these forecasts hit the mark.

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