Business Cycles and Short-and Long-term Expectations
The business cycle refers to variations of economic productivity–often measured in terms of GDP–around its long-term trend rate. It is this long-term trend rate that serves as an anchor for forecasting business environments. This is because the economy cannot sustainably…
Challenges in Developing Capital Market Forecasts
Inappropriate capital market expectations could be devastating to portfolio performance. Several pitfalls could lead to false expectations and a less-than-optimal asset allocation. Regardless, the analyst is tasked with following a disciplined process and understanding potential challenges in developing capital market…
Common Behavioral Biases
Mnemonic Devices for Easy Recall Cognitive: The cognitive biases can be remembered with the following mnemonic device: Con-Con-Con-Rep-Hind + FAMA (think Fama and French). Emotional: The emotional biases can be remembered with the following mnemonic device: LESSOR (the owner of…
