Problem

In 1999, the S&P 500 returned 21 percent, closing out a streak of five consecutive ste...

In 1999, the S&P 500 returned 21 percent, closing out a streak of five consecutive stellar up-years. Then in 2000, the S&P 500 returned –9.1 percent. In 2001, the S&P 500 returned -16.1 percent. At the end of 2001, Wall Street strategists who were interviewed by Barron’s forecast that the S&P 500 would increase by 21 percent in 2002. In 2002, the S&P actually returned –23 percent. The average strategist’s forecast for 2003 was for an increase of 15.3 percent. Do these forecast reflect any psychological biases?

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Solutions For Problems in Chapter 4