In theory, nobody apart from the C-level executives knows more about a company than the 5,000 or so analysts who follow American companies.
In theory, they’re the first line of defense calling attention to a sector that has lost its way (newspapers anyone?).
In theory, they’re the proverbial canaries in the coalmine, tweeting you to get out of Dodge while you can.
Well, you can throw theory away.
Wall Street’s legion of analysts is one well-paid but dangerous group of so-called experts. While they follow every twist and turn a company makes, they also too often and uncritically accept company propaganda as the gospel truth when it’s pure fiction.
Why do these very smart people act in such a strange way? Here are five reasons…
They are afraid of upsetting their superiors and risking their own livelihood.
They’d prefer not alienating the firms they follow because these companies also generate business for their employers regarding bond offerings, equity deals, acquisitions, buybacks and other activities.
They don’t want to rock the boats with their colleagues who are under the same pressure to avoid negative assessments.
Their access to routine meetings with senior management of the companies they follow could be jeopardized.
Amazingly, the proportion of sell ratings on Wall Street remains under 5%. The word “sell” just isn’t in their vocabulary.
So, do you follow the ratings of analysts and do you take them seriously?
How have you done? And are there any contrarians out there who buy when ratings for a company go south and sell when they improve? Simply scroll to the bottom of my article to post a comment!
—————————————————————–
Editors Note: Ex-CIA “Contractor” Exposes a 142-Year Old, Covert Racket
D.C. Power Players Absolutely Don’t Want to Let You Know What They Are Up To or How to Join Them in This Legal “Heist”… click here to find out more
