20 Analysts Are Two Times Better Than Five [CHART]

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Seth Klarman: Investing Is Art First, Craft Second And Science Third

Seth KlarmanSeth Klarman is considered to be one of the best value investors of all time. Unfortunately, he does not give many interviews or lectures. Q2 2020 hedge fund letters, conferences and more Luckily, those interviews and speeches that he does give are stuffed full of information and highly insightful comments that value investors can learn Read More


  • According to vox populi (wisdom of crowds) theory, more guesses should make consensus estimates more accurate
  • With analysts forecast earnings, it holds true for up to 30 analysts as forecast error is reduced with increased analyst coverage
  • However, for companies with more than 30 analysts covering it, accuracy starts to deteriorate
  • This shows that more analyst estimates only improve consensus estimate accuracy to a point

 

Full paper available for free at SSRN.

 

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