The global settlement of tainted sell-side research on Wall Street gave rise to hope that independent research would flower and eventually raise the stakes for all research providers. But what has happened?

Well, for the most part, the sell-side analysts do not seem to be doing a measurably better job. New research from McKinsey & Co., as noted by the AP, has found that analysts tend to still be overoptimistic, a long standing problem, and slow to revise their forecasts to reflect new economic conditions. They are especially prone to making inaccurate predictions when economic growth declines.

Over the last 25 years, analysts have estimated earnings growth to be about 10 percent to 12 percent for Standard and Poor's 500 companies, while actual growth was only 6 percent. This year, the analysts seem to be faring as poorly as ever. Bank analysts have been woeful when it comes to predicting earnings. In general, many are now sticking to bullish expectations, perhaps revealing the influence of executives at the companies they cover. Usually, analysts pare as the year progresses. But not so this year. 

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