- What is a Wall Street Securities Analyst?
- Wall Street Analysts Are Bad at Stock Picking
- Opinion Rating Systems Are Misleading
- When an Opinion Is Lowered from the Peak Rating It Means Sell
- Research Reports Do Not Contain an Analysts Complete Viewpoint
- The Entire Stock Market Is Biased in Favor of Buy Ratings
- Buy and Sell Opinions Are Usually Overstated
- Wall Street Has a Big Company Bias
- Brokerage Emphasis Lists Are Frivolous
- Stock Price Targets Are Specious
- The Street Is Extremely Short-Term in Its Orientation
- Analysts Miss Titanic Secular Shifts
- Street Research Unoriginal, Opinions Similar
- Analyst Research Is Valuable for Background Understanding
- A Lone Wolf Analyst with a Unique Opinion Is Enlightening
- The Best Research Is by Individuals or Small Teams
- Overconfident Analysts Who Exhibit too Much Flair Are All Show
This chapter is from the book
This chapter is from the book
This chapter is from the book
Buy and Sell Opinions Are Usually Overstated
Analysts cheerlead their Buys, and disparage the Sells. The Street tends to overdo its enthusiasm on stocks being strongly recommended, effectively pounding the table to attract investors to amass major positions. The ardor is self-fulfilling. The more proficient analysts are in this endeavor, the higher the stock climbs, and the better our call looks. We promote these favored ideas way out of proportion to the reality, and the stocks can ascend to artificially high, unsustainable levels. The opposite is true for the infrequent Sell opinions. We are overly emphatic on all the negatives, diss the company at every opportunity, and basically pile on an already troubled, depressed stock. This is to help push the shares lower to make our negative view all the more correct. In both situations, analysts overstay their positions. Stocks overreact in both directions far beyond what is warranted by reality, due mainly to analysts going overboard in stressing their stances. Investors should sell when analysts get overly enthusiastic and avoid unloading (maybe even buy) when an analyst has derided a company too long.