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April 1, 2022

Eventually Met

Given the unpredictability of investment markets and corporate fundamentals, we tend to pay minor heed to generally unreliable guesswork about the future, instead emphasizing the facts of market history. Analyst estimates for corporate earnings provide a fine example of a dataset that one otherwise might think would be usable, driven as it is by crowd-sourced wisdom. Turns out that they’re not the most dependable source of real-time information:

  • Early estimates for future corporate fundamentals tend to prove overly optimistic
  • While changes in estimates highlight shifts in investor sentiment that could be seen as informative, they probably are at best a lagging indicator
  • We think folks with a long-term orientation to their investments should maintain a focus instead on similarly longer-term trends

Also listen to this month's podcast from CIO Mark Mowrey:

20220401 SAM Commentary

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