Q1. What personality traits cause analysts to make investment mistakes? A. One is overconfidence. People are grossly overconfident about what they think they know. Securities analysts who are overconfident don't give new information enough weight when they revise their earnings forecasts for companies. "Anchoring" is another potential pitfall. Many analysts under react to new data because they are fixated on the first numbers that come up. Q2. Interesting, but how do you come up with specific stock picks? A. We look for a stock that's had a positive earnings change we don't think is a fluke but is still under priced because anchoring and overconfidence have prevented analysts from revising earnings estimates upward enough. A recent example of this is the retailer Best Buy, whose shares were selling for $24 when the company beat earnings expectations last September. It took about a month for analysts to push up their profit projections and for the stock to take off. It recently sold for about $56. Q3. How do you decide that analysts are anchored and overconfident, as opposed to just being prudently skeptical? A. One way is by participating in conference calls between analysts and company managers and by reading analysts' commentary on stocks. People don't want to admit they're wrong, so we look for instances where analysts say "I don't believe it" or "It's just temporary." Q1. What personality traits cause analysts to make investment mistakes? A. One is overconfidence. People are grossly overconfident about what they think they know. Securities analysts who are overconfident don't give new information enough weight when they revise their earnings forecasts for companies. "Anchoring" is another potential pitfall. Many analysts under react to new data because they are fixated on the first numbers that come up. Q2. Interesting, but how do you come up with specific stock picks? A. We look for a stock that's had a positive earnings change we don't think is a fluke but is still under priced because anchoring and overconfidence have prevented analysts from revising earnings estimates upward enough. A recent example of this is the retailer Best Buy, whose shares were selling for $24 when the company beat earnings expectations last September. It took about a month for analysts to push up their profit projections and for the stock to take off. It recently sold for about $56. Q3. How do you decide that analysts are anchored and overconfident, as opposed to just being prudently skeptical? A. One way is by participating in conference calls between analysts and company managers and by reading analysts' commentary on stocks. People don't want to admit they're wrong, so we look for instances where analysts say "I don't believe it" or "It's just temporary