So I read the behavioral finance sections a few weeks ago. Lots of stuff about how people, even experts, consistently do silly things. Overconfidence bias, anchoring, etc. This theme essentially culminates in CFA Book 2, Reading 12, “The Folly of Forecasting: Ignore all economists, strategists, and analysts.” I’m now into the fixed income stuff, and I’m reading about how managers with superior skills can setup fixed income portfolios that will beat indexes. The reading doesn’t explain how managers know if they have superior skills (or just good luck?) and doesn’t mention how many managers have “superior” skills? Like the men around Lake Woebegon, are 75% of portfolio managers above average? I also enjoyed reading about how capital market expectations are formed. The analyst can gather data and whatnot, but at some point the analyst has to use his or her own experience and judgment to reach a conclusion. But isn’t that folly? Anyone else find the contradictions amusing?