overconfidence will lead to... impact

LBriscoe

underestimating risk but over or underestimate a event impact on a stock?

lcw77

a short career,,,,,,,

Valores

would say OVERestimate (just my rough guess)

I know some overconfident guys from the business and that really helps to have those poor performers in mind to the exam, also for Type I error ;-)

they short (!) the index one week after fukushima and wonder why they hit the rebounce ;-)

in essence (practice not CFAI) they have no idea whatsoever is going on and use a lot of ceteris paribus excuses, too, i.e., they say their trade was right but this one event did change everything. Anoterh example: a trade from me (would have deliverd 50% plus in some 2-3 weeks) did not go through because mr. overconfident knew of one larger bid side (so he overestimated this "event").

So they have not the b....ls to stem the vola until the profit materializes which supports the narrow confidence intervals

enough philosophized...

mik82

^^^ indeed....if you are overconfident that a signifigant negative event will occur and smash the stock price, I would say you overestimate event risk.

If you are all bulled up on a name you will underestimte it.

oneboy

Tough....I would say underestimate as event impact is a risk and you will underestimate risks and therefore underestime event impacts.

Chuckrox

it depends you can be overconfident that a netflix is overpriced or underpriced