Analysts

J

Johnnot

Guest
Am I the only person flabbergasted by the inconsistency of analysts' advice? Oh, a company is a buy at €5; a sell at €4; a buy at €10; a buy at €100; oh no you should sell now at €80, or should I say €8 etc.etc.

The usual nonsense reply to this is that this volatility only reflects market sentiment. Well if all they are being paid for is to recognise market sentiment then I might as well pay my taxi driver. What happened to fundamentals, analysis and understanding of profit drivers, sustainability of profits etc.

The latest nonsense is support by well known Irish fund managers and advisors/analysts for a well known Irish telecom company. When little has changed in an industry, valuations suddenly are up and oversubscribed 'cos "sentiment is better". I read of companies shares being attractive 'cos they are paying out a high dividend in the first year. Pardon? Can't any company pay out a huge amount in year 1, but unless that goes on forever how can that be any indication of the worth of the company? Scary stuff. Yet, these are the people charging huge amounts to pension scheme trustees, the public etc. to provide 'advice'. They seem to me to exist purely to prompt others to purchase/sell shares in order to earn fees. The 'advice' is a meaningless piece of hopelessly inconsistent tomfoolery designed to front this activity. The sooner this is investigated, and their shocking track record exposed the better.
 
While I share your general concern, there could well be good reasons to support apparently inconsistent recommendations like "a company is a buy at €5; a sell at €4; a buy at €10; a buy at €100; oh no you should sell now at €80, or should I say €8"
 
Agreed Johnnot: I generaly tend to ignore analyst ratings. Over a number of yrs I've tracked a particul no of stocks for which the analysts tend to get is wrong. The typical wrong ones are teh headline only news such as "Needham & Co: Price target for XXX is $30". Now could well be that the stock is undervalued - but it does not mean that the market Movers are going to follow suit.

ninsaga
 
Whatever about assessing a particular share price level with reference to company fundamentals such as actual or projected earnings, cash in bank etc. analysts can no more predict the future that you or I or Mystic Meg.
 
The same is true of Football pundits. I listen to the Last Word fairly regularly and they are often completely wrong about how a game will turn out.

I know shag all about football to be honest, but I reckon I could predict the results of any given set of 10 Champions League matches with about as much accuracy as a panel of pundits.

The Advice and Punditry industries are driven primarily by the ever growing number of outlets for information. You'll rarely see a lookback over a year on a TV station at how many times their Pundits called it right and wrong.

Listen to Financial Pundits for ideas, who's floating, who's reporting results, what industries are doing well or poorly. Never buy anything because someone say's it's worth more than it costs right now.

-Rd
 
...hmm last yr I recall an economist/analysy on Bloomberg stating that 'all the indicators were right' for the DJIA to drop to 6000 by end of 2003!

ninsaga
 
Spot the difference:







I think they'll stay the same. There - that's all the bases covered now...

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It reminds me of the old swindle where you mail 1000 letters to people claiming that a particular share price will rise and 1000 claiming that it will fall.

Two months later you have 1000 people who think you were right butthey don't know about the 1000 for whom you were wrong.

You then take the 1000 people for whom you were right and for 500 of them you predict that another share will rise, predicting a fall for the other 500.

Two months later you have 500 people for whom you've twice predicted the market moves.

You repeat this until you end up with about 60 people for whom you've correctly made 5 predictions over a 10 month people.

Then you offer them a chance to subscribe to your very expensive news letter.

Obviously the figures can be scales up for a bigger final group of punters.

-Rd
 
It reminds me of the old swindle where you mail 1000 letters to people claiming that a particular share price will rise and 1000 claiming that it will fall....
Click to expand...

Yeah - it's a good one all right...

www.arachnoid.com/psychology/
 
There's a sense of deja vu about this discussion as I seem to remember myself sounding off a few times about analysts some years back on the old UBB board of AAM.

Reminds me of the old saying about economists/analysts predicting 3 of the last 20 recessions...
 
This topic certainly seems to have exercised you in the past all right! :lol
 
Breath deeply and repeat after me ... "Cool, wet, grass. Cool, wet, grass...."

 
Economists

Hi-ho campers,

One of the recent contributors said the economists predicted 3 out of the last 20 recessions.....

Given that economics is known as the dismal science, surely the figures should be inverted???

Regards,


OpusnBill
 
i don't think it's fair to lump economists in with analysts. most of the former are not trying to become celebrities pretending it's possible to disprove everything which has been learnt about financial markets in the last thirty or forty years. in fact there's a term for what analysts peddle - "financial pornography" - and it's generally considered worthless; you'd be better off reading the astrology page for predictive power. economics is a broad subject but has a proper serious side in academia and is rightly considered a science. "popular economics" generally confines itself to discussing macro-economic indicators and not trying to outguess markets.
 
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