…it is really difficult for me to understand why so much these “estimates” seem to have so much weight when the analysts themselves apparently have zero accountability.
People trust “authority.” You see it in every walk of life. For Catholics the Pope is infallible but he wasn’t before he was invested with the title and was just a Cardinal. That is just one extreme example but you see it in academia where you have to pass a “peer review” and you are only right after the experts say so. One day I dared correct my dad and got a slap on the ears for my efforts. How could I dare question his infallibility? It gives people a sense of security to listen to authority.
Louis Navellier, an investor advisor I respect (he helped me make quite a bit of money) puts a lot of faith in “surprises” which beat analysts estimates. It’s not so much about the analysts themselves but about how the crowd will react to the results as compared to what the “experts” said would happen.
You have to understand that stock prices in the long run are controlled by performance but in the shot term they are driven by market sentiment. That’s the essence of what Ben Graham meant when he wrote that in the short term the market is a voting machine but in the long term it is a weighing machine
https://www.quora.com/What-does-Benjamin-Graham-mean-when-he…
http://news.morningstar.com/classroom2/course.asp?docId=1429…
If Ben Graham was right then it makes little sense for an investor to worry about the daily ticks on the stock price chart. On the other hand, if you are a trader then these ticks have valuable information if you know how to read them.
Denny Schlesinger