Psychological biases and the Stock Market
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In, 1999, the S&P returned 21 percent, closing out a streak of five consecutive stellar up-years. Then in 2000, the S&P 500 returned -9.1 percent. In 2001, the S&P500 returned -16.1 percent. At the end of 2001, Wall Street strategists who were interviewed by Barron's forecast that the S&P would increase by 21 percent in 2002. In 2002,the S&P actually returned -23 percent. The average strategist's forecast for 2003 was for an increase of 15.3percent. Do these forecast reflect any psychological biases?
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Solution Summary
This solution describes the psychological biases of strategists on determing the forcast for the different indices on the stock market.
Solution Preview
The forecasts by Wall Street strategist in fact reflect psychological biases. The fact of the matter is the markets around the world are effected by ongoing and future world events. It is impossible to determine what the future will bring. An ...
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