Evidence suggests behavioral biases creep into the expectations of even the most sophisticated investors — in this case Wall Street analysts. Their influence on stock prices offers a potential source of alpha; if investors can predict how behavioral biases will shape a Wall Street analyst’s estimates, investors might capture excess returns as the market responds to analyst expectations.
Wall Street analysts’ susceptibility to behavioral biases is significant because of their influence on stock prices. Research indicates their opinions — transparent in the form of publicly available earnings estimates — are one of the single greatest company-specific determinants of stock price movement.
READ MORE >
There are no guarantees that any strategy will be successful.
The views expressed are those of the author at the time created. These views are subject to change at any time based on market and other conditions, and 361 Capital disclaims any responsibility to update such views. No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any 361 Capital portfolio.
This 361 Capital article is not intended to provide investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by 361 Capital or any third-party. You are solely responsible for determining whether any investment, investment strategy, security or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.