- What Is a Wall Street Securities Analyst?
- Wall Street Analysts Are Bad at Stock Picking
- Opinion Rating Systems Are Misleading
- Research Never Contains an Analyst's Complete Viewpoint
- Wall Street Has a Congenitally Favorable Bias
- Downgrades Are Anguishing, Arduous, and Rare
- Most Downgrades Are Late; the Stock Price Has Already Fallen
- Buy and Sell Opinions Are Usually Overstated
- Wall Street Has a Big Company Bias
- Brokerage Emphasis Lists Are Not Credible
- Stock Price Targets Are Specious
- The Street Orientation Is Extremely Short-Term
- Analysts Miss Titanic Secular Shifts
- Street Research Is Unoriginal; Opinions Conform
- Analyst Research Is Valuable for Background Understanding
- A Lone Wolf Analyst with a Unique Opinion Is Enlightening
- The Best Research Is Done by Individuals or Small Teams
- Overconfident Analysts Exhibiting Too Much Flair Are All Show
This chapter is from the book
This chapter is from the book
This chapter is from the book
A Lone Wolf Analyst with a Unique Opinion Is Enlightening
There is true value added in a unique perspective that is contrary to the crowd. An analyst shift to a negative stance that is all alone is a noteworthy signal. Other analysts might maintain their favorable views and pooh-pooh the dissenter’s conclusion. He might be castigated, dissed by executives, and attacked by major institutional holders of the stock. These repercussions are anticipated, and that is why a dramatic rating slash is always brutal for the analyst. Often there are no hard numbers or evidence to clearly indicate cracks in the surface. When an analyst is so courageous and willing to stick his neck out with a minority viewpoint, he is displaying a certain conviction. The view is enlightening.
Richard Bove at Rochdale Research has had a 26-year career as an objective, often contrarian analyst covering the banks and investment companies. His firm is not a major investment banker for that sector, so Bove seems to have free rein to tell it like it is. A lone wolf, he was vociferously negative on the group before the collapse in 2008. In a New York Times story he was quoted as saying, “I do not give a damn about what the company thinks. I can say what I want about Citigroup, when I want, as long as I am honest. I was convinced that the financial industry was out of control. It just smelled, it looked, it felt like this thing was going to crash. And we kept pounding on it.” An observer mentioned in the same article, “He is amongst the best pure security analysts, quite frankly, that I have ever met. He does not mince words, but his comments are founded on strong analysis.” Unfortunately, the Wall Street system in the main prevents such forthright, unbiased research.