Consensus Surveys
You're all set to go out for a leisurely walk. Weather forecasters have predicted sunny skies and warm temperatures, so you head out in shorts and leave the sweater at home. Ten minutes later a heavy thunderstorm erupts, followed by colder air. You quickly scramble back for a change of clothing, all the while cursing the forecasters. How could they have gotten it so wrong?
Money managers encounter similar experiences, except that instead of weather, they tend to rely on surveys that feature forecasts from experts on what an upcoming economic indicator will report. If the actual economic news falls in line with expectations, there is generally little market reaction to the news because investors already anticipated it. By getting ...
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