Optimism Bias

I'm pretty fascinated by this chart from the McKinsey Quarterly, which is a great demonstration of the optimism bias. The chart captures the earnings estimates of equity analysts for S&P 500 companies. The downward slope of these yellow lines is what happens when our hopeful projections meet dismal reality:

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Needless to say, these estimates come from highly paid professionals, with access to vast amounts of data. (They're also making projections about the relatively near future....