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How Good Are Analysts and Management at Forecasting Trouble? Avatar Associates

Posted by Seton McAndrews | CFP®, Vice President Investments
July 11, 2011

Money manager Avatar Associates takes a look at prospects for the second half of 2011 and the track record of analysts and their predictions. "While second quarter profits may be encouraging against a shaky background, if managers suggest that their expectations for the immediate future have moderated, then the hoped-for second half revival will face a serious challenge. Incidentally, analysts are strongly guided by these management assessments. And if analysts have never correctly forecast trouble ahead, perhaps it is because neither has management. It is usually a case of going over the waterfall together. So if management actually does see a slowdown ahead, we should all take note."

Avatar Associates