Thursday, January 22, 2009

Stock Analysts are JOKERS

Zig Ziglar, the powerful motivational speaker says "Media has successfully predicted 36 of the last 3 recessions". If analysts are smart enough to predict the market, they'll be making BILLIONS every year and enjoying their time in Bahamas or Jamaica. But the reality is, these analysts work for pay checks.

For every analyst who predicts that a stock will OUTPERFORM, there will be another analyst who'll say that the stock will UNDERPERFORM. Whenever an analyst increases the stock rating, the stock goes UP and whenever an analyst reduces the stock rating, the stock comes DOWN. Doesn't this make the stock movement so PREDICTABLE? If 'something' is very PREDICTABLE, it is easy to 'control' or 'manipulate' that. If something can be easily manipulated, what will smart minds do? They'll just MANIPULATE them. Stocks are not an exception. Stocks are MANIPULATED.

There is also one more reason why you shouldn't blindly follow the analyst guidance. Most of the firms, for which these analysts work-for, run some hedge funds or investment funds. So, there is lot of 'selfish' motive for the analysts to give a 'guidance' that is in favor of their investment portfolio. Novice investors like you and me get wiped-off of our savings.

How do you know that the analysts who gives guidance for a stock is 'smart' enough? You don't get to see or interact with them. You don't know about their skills or academic performance. Who knows, the analyst might have even 'failed' in his/her 'financial valuations' papers. There is no way to judge the performance of these analysts. Then, how can we trust these JOKERS?

Listen to the analyts. But don't follow them or their guidance. Do your own research and use your judgment. Don't ever buy a stock just because some XYZ analyst recommends it.

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