Trading on Analyst Reccomendations
To the average , non-educated investor. Would trading on analyst commendation's considered to be educated investing (will they usually make money by following stocks with a high amount of "strong buy" ratings), or would it still be speculation?
I am starting out a portfolio and due to lack of knowledge in analysis, I'd like to know if this is a viable option, backing up stocks im interested in with analyst recos.
secondly, does anyone know a good site to find the analyst reccomendations for all stocks on one page?
Back when I got started, ER guys couldn't find their ass with both hands. If they put a buy rec on something, the easiest money you'd ever make was shorting it.
Even though I think research has improved immensely since the early 90's, I'm still deeply suspicious of reports and recommendations written by firms that have a vested interest in the underlying company. The Chinese Wall is a joke.
Educate yourself before investing. That way, when you fuck up you have no one else to blame. If I'm considering a company that has racked up almost universal buy recommendations, I'm usually inclined to go the other way.
ER reports (especially initiation reports) are good ways to get a an understanding of what the company does and how the economic environment or significant events are understanding operations. You'd be a fool however to just follow the actual recommendations analysts have.
As far as where to find them, they tend to be pretty pricey, so you're best bet would be to be a student (undergrad or grad) at a school with free access to something like Thomson of Investext.
-Advisor
Advisor Prime Academic & Corporate Interview Prep elitecollegeandinterviewprep.blogspot.com
Edmundo please be careful you almost took my eye with that growing nose of yours.
???
Agree with Edmundo- "When u fuck up, u have no one else to blame".
I'll give u an instance during the Israel-Lebanon war in 2006. When oil was trading at 87 levels, Goldman Sachs analysts came up with a report that oil would reach $100 in the next month. From 87, it went to as low as 49 levels. That's when some "analysts" said the true price of oil is $21 based on their research.
Like our MD says, "Those who can, do. Those who can't, become analysts".
Research reports are an important tool in getting to understand a company. Initiating coverage and industry pieces are great ways to get up to speed on a company and understand its business model.
That being said, find the best independent research you can if you are looking for B/S/H recommendations. With no chinese wall issues the independent research tends to be of a higher quality since the only way their research gets looked at is if its good.
There are also star analysts in various industries at the BBs. Just because the name of the bank is good (JPM, GS, MS) doesn't mean the research is any good. GS give great real estate ER, but sucks in natural resources and some other areas.
Don't blindly follow recommendations, however good analysts can point you to good investments and bad investments. THen you can follow up on your own to figure out what you should buy.
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