As a strategist who uses macroeconomic and other ‘big picture’ data to assess the fortunes of stock markets, I would obviously argue that investors ignore the macroeconomic environment at their peril.
Without taking anything away from your point, I think the bigger issue is that this data reflects just two quarters. that's a difficult timeline to be judging sellside performance, everything else notwithstanding.
I agree, but I have written in the past about longer time horizons and analysts are pretty bad at that too. Indeed, they may get worse the longer the time horizon, while macro forecasts ~(outside of currencies and interest rates) tend to get better the longer the time horizon.
(1) Howard Marks says he ignores Macro. Fundamentals count more. (2) However, if the trend is downwards you take more care. (3) For an intended stock buy you may use Technical Analysis to identify a break out through resistance.
It is not always easy to identify a change in Macro.
Perhaps analysts outperform for current quarter forecasts because companies have a pretty good idea how their current quarter is looking, and they share this information on the form of "guidance"
What is your opinion about the accuracy of IBES data? It is used in this research. Do you think the data is reliable enough for this kind of research, given that rewriting of the past has been documented: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=889322?
It is in my experience the most comprehensive data for analyst forecasts. It is about the same quality as Bloomberg consensus forecasts but the quality of Bloomberg data is declining as more and more sell side firms refuse to share their analyst forecasts with Bloomberg (e.g. UBS).
It definitely is not perfect, but among the best data out there at least for practitioners.
Without taking anything away from your point, I think the bigger issue is that this data reflects just two quarters. that's a difficult timeline to be judging sellside performance, everything else notwithstanding.
I agree, but I have written in the past about longer time horizons and analysts are pretty bad at that too. Indeed, they may get worse the longer the time horizon, while macro forecasts ~(outside of currencies and interest rates) tend to get better the longer the time horizon.
(1) Howard Marks says he ignores Macro. Fundamentals count more. (2) However, if the trend is downwards you take more care. (3) For an intended stock buy you may use Technical Analysis to identify a break out through resistance.
It is not always easy to identify a change in Macro.
Perhaps analysts outperform for current quarter forecasts because companies have a pretty good idea how their current quarter is looking, and they share this information on the form of "guidance"
That's exactly it.
What is your opinion about the accuracy of IBES data? It is used in this research. Do you think the data is reliable enough for this kind of research, given that rewriting of the past has been documented: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=889322?
It is in my experience the most comprehensive data for analyst forecasts. It is about the same quality as Bloomberg consensus forecasts but the quality of Bloomberg data is declining as more and more sell side firms refuse to share their analyst forecasts with Bloomberg (e.g. UBS).
It definitely is not perfect, but among the best data out there at least for practitioners.
Thanks, Joachim.