• Media type: Report; E-Book
  • Title: Do financial market experts know their theory? New evidence from survey data
  • Contributor: Brückbauer, Frank [Author]
  • Published: Mannheim: ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, 2022
  • Language: English
  • Keywords: stock market expectations ; stock return predictability ; G12 ; D84 ; macro-finance ; survey data
  • Origination:
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  • Description: Using a unique survey dataset, I study how financial market experts form their stock market expectations. I document a strong disagreement among experts about how important macroeconomic and financial variables are related to stock returns. The results of an analysis of the relationships between my main survey measure of expected returns and measures of economic conditions are largely consistent with the view that expected returns are counter-cyclical. In particular, I find a positive relationship between expected returns and the dividend-price ratio, which is at odds with the findings of previous papers studying survey measures of expected returns. Finally, I find that an aggregated measure of the financial market experts' stock return forecasts has weak predictive power for actual returns, but is a less precise forecast than a simple average of historical stock returns. ; This draft: April 2022
  • Access State: Open Access