ongoing quarterly survey asks the chief financial officers of US companies to estimate the annual return of the S&P 500 index for the next year. The CFOs provide two numbers: a minimum, below which they think there is a one-in-ten chance the actual return will be, and a maximum, which they believe the actual return has a one-in-ten chance of exceeding. Thus the two numbers are the bounds of an 80% confidence interval. Yet the realized returns fall in that interval only 36% of the time. The CFOs are far too confident in the precision of their forecasts.
