Clarification About the Word "Consensus"
In this article I refer to consensus in two ways: consensus estimates and consensus opinion. A reader pointed out that this was confusing, and I realized that I was using two definitions for the same word:
1) A consensus can mean a generally accepted opinion or belief. In the context of news, consensus means the accepted narrative or conventional thinking.
2) A consensus also means an "average projected value," such as a consensus forecast or consensus earnings estimates
In this article I discussed the consensus forecast for 2019 corporate earnings. I refer to consensus estimates collected by FactSet, a dataset that averages brokerage estimates of corporate earnings.
Generally speaking, consensus estimates for corporate earnings are considered reliable: It's hard to come up with a more robust prediction than the wisdom of the crowd. In fact, some people believe that it's not worth the effort to make independent estimates of corporate earnings since you are unlikely to improve on the accuracy of published estimates.
Do Consensus Estimates Qualify as "News"?
I am not sure how to categorize consensus estimates. Are consensus estimates a "fact" or merely an "opinion"? Earnings estimates are certainly a form of information, and there is strong evidence that earnings estimates affect stock prices. But I am not sure how to categorize this information. To the best of my knowledge, estimates are an ambiguous category of information, like opinion polls.
My thanks to an astute reader for pointing this out.
Rob