Why do analysts display overoptimism about the stocks they cover? According to the selection hypothesis, analysts pick their favorite stocks and are truly too optimistic. According to the conflict-of-interest hypothesis, analysts distort their view to maximize profits via commissions and...

Our ability to forecast degrades rapidly the further out we predict. Even if we do manage to accurately forecast an event, the magnitude and consequences of that event usually astonish us. On the rare occasion where we manage to accurately forecast the event, its magnitude and consequences, our...