Part 3/12:
This misalignment matters because the common perception—that a general "bullish consensus" implies less uncertainty—can be misleading. Investors often interpret widespread confidence or consensus as clarity about future prices. But what the analysis shows is that clarity is often superficial.
When analysts agree on the general trend but employ different frameworks, their forecasts can be wildly different in specifics. This leads to overconfidence in predictions that may not be as reliable as they seem. Understanding how analysts arrive at their forecasts—their mental models—is crucial for making informed decisions rather than taking predictions at face value.