Good From Far or Far From Good?: - An Experimental Study on Financial Experts Forecasting Ability

Abstract: Are stock market professionals better than novices in forecasting stock prices? Forecasting stock prices is a highly complicated assignment which encompasses a large number of tasks. Still, much research points to the fact that highly knowledgeable stock market professionals fail to outperform novices in stock price forecasting. In our thesis, we let 75 participants on the Stockholm Stock Exchange perform one-month stock price forecasts for stocks listed on the OMXS30-index. Participants consisted of both stock market professionals and novices. Our results lead us to conclude that; (i) experienced stock market professionals make less accurate forecasts than novices; (ii) stock market professionals are not more confident than novices; (iii) confident individuals make less accurate forecasts than less confident individuals; (iv) confidence level and forecasting behaviour cannot be manipulated by training.