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There’s No Crystal Ball

Crystal BallIt’s amazing when analysts seem to know what a stock price will be a week, a month and even sometimes a year from now. But because they aren’t mind readers and don’t own any (to our knowledge) crystal balls it’s hard to determine how accurate these readings can be. Today’s article discusses this dilemma. Here’s how they describe what analysts need to do, “To come up with their individual estimates, these analysts have to project what a company’s business will look like a year from now, typically focusing on its earnings, among other factors. Then they need to account for how much investors will be willing to pay for those earnings. In other words, after forecasting a company’s earnings — which is the “e” in a stock’s price/earings ratio — analysts have to determine the price (or “p”) that investors will assign that company.” To read more, CLICK HERE.