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Economists

This chapter would not be complete without poking a little fun at my colleagues (and at myself by association!), the financial economists. Economists are frequently employed to make economic and stock market predictions for prestigious financial institutions. Economists are highly trained in economic theory and statistics. Does this education give them an advantage in forecasting that can help other investors? This section examines the predictive behavior of practitioner and scholarly financial economists.

Many economists are employed by Wall Street firms and are asked to make stock market direction predictions. Every June and December, since 1952, Joseph Livingston has surveyed economists from business, the government, and academia. About 40 economists forecast the level of S&P 500 Index both 7 and 13 months ahead. This is known as the Livingston survey. The survey originated as a product of the newspaper, the Philadelphia Enquirer, but became so highly regarded that it was taken over by the Federal Reserve Bank of Philadelphia. How do these highly regarded economists do?


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