Bullish Bias
#biases #optimism
Wall Street's research has a peculiar tendency: it overwhelmingly favors "buy" over "sell" recommendations. This bias stems from simple economics, every investor is a potential buyer, but only current holders can sell. More tellingly, analysts often shy away from negative reports, especially about their firm's clients. Take the case of analyst Marvin Roffman, who lost his job in 1990 after criticizing Donald Trump's Atlantic City casinos. It's surprisingly easy to be optimistic on Wall Street; a few rosy assumptions can build a compelling case for almost any investment. But this relentless focus on upside potential often obscures a crucial element: risk. The street's perpetual optimism might fill brokerage accounts, but it can empty investors' pockets.