Relying on Expert opinions
In general on this blog, I have not been very kind to stock market experts ( pundits,opinion baazs), you can read through some of my previous outbursts here
In late 1980s, psychologist Philip Tetlock began an important research projects of the past three decades, studying how experts make predictions, who gets things right, and who gets things wrong. His inspiration came from watching experts predict the future of the Soviet Union — an event that very, very few got right. Notably, most of those who misjudged the event wouldn’t even admit that they got it wrong. The book draws one big conclusion: Most expert predictions are the equivalent of random guesses.
The stock market is a perfect to see this unfolding every day, In this post I am showing you just one example but the place is full of such pundits
Last year around April 2016, India’s first e-commerce company was planning to list on Indian bourses (previously makemytrip and others have also listed but overseas) , The overwhelming opinion from expert reviewers of IPO was that issue from Infibeam was untouchable
Let’s look at some of them
Some claimed, Infibeam is unsuitable for retail investors
While few pointed out that this issue is for only for risk savvy investors
Others were ruthless in their analysis
when in chorus experts go at great length in using flamboyant words such as extremely negative..
Some even went ahead and said that company is not only a badly investment now but also it is unlikely to post significant profits in near future
Since all pundits were against the issue it got a luke warm response
Fast forward to 2017, the facts are different from what experts thought 🙂
Aren’t you surprised ?
The company has delivered two of the best quarters in last 4-5 years
and the stock has sky rocketed up 200% from its listing price
Especially in a market which has gone no were from May 2016
I will end here with a quote from 25iq blog
“The predictions of the average expert were ‘little better than guessing,’ which is a polite way to say that ‘they were roughly as accurate as a dart-throwing chimpanzee.’ When confronted with the evidence of their futility, the experts did what the rest of us do: they put up their psychological defense shields. They noted that they almost called it right, or that their prediction carried so much weight that it affected the outcome, or that they were correct about the prediction but simply off on timing.”
Note – This post is not written to malign IPO reviewers , This is to showcase that we as investors should take forecast with a spoon of salt