Seems like analysts cover a list of names and research them, then provide recommendations for their PM come earnings season for those names. What’s the success rate of this? Why can’t I just do the same by myself?
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You don’t have the leverage they do. Most MMHF’s are lucky to make 3-7% a year on their book pre leverage. After 5x-10x leverage this obviously scales…
You can, but 1) you will be stressed out AF eeeking out "singles and doubles" for 5-10% each year, if you are good. 2) pod shops can magnify that 5-10% via leverage.
You might as well flipping short-term treasuries.
It’s a little more nuanced than providing recommendations into earnings.. earnings are ofc big catalysts but there’s a bunch of stuff happening intra quarter too (conferences, surveys, channel checks, data releases, etc.)
On top of that it’s not just a binary rule based thing (i.e. if your recommendation is company A will beat earnings so buy and vice versa you will probably not be very successful). For 1, quarters are backward looking. What if they miss but provide really strong outlook? What if the results and guidance are stronger than analyst estimates but the stock already went up as ton expecting good earnings? Also remember that sell side consensus is not really true buyside consensus. In fact it almost never is. Sell side analysts aren’t paid to be heros.. they will just model the quarters based on company guidance. Buyside analysts on the other hand are paid to find differentiated views
Also, pros rely on resources ranging from corporate access to sell side help to bloomberg to alt data that cost millions of dollars a year. That gives them a huge advantage versus you using Yahoo Finance and Seeking Alpha as your primary sources.
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