F*ck Analysts

You might find this interesting.

Take a look at NWAC. It filed bankruptcy today but JPMorgan and Morgan Stanley have reiterated Buy ratings for the stock.

so you say “fuck ANALysts”. I assume it’s gonna be “anally fucking”
regards.
BTW love your opinion.

Maybe they downgraded BIDU so that they could buy shares.

The nice thing about the stock market is that you can make money off of other peoples’ manipulations. You have to decide if you’re a shark or a sheep. Sharks eat sheep. For me, it is nice when people like Cramer or “Bear Stearns” corral them for you. This is NOT a friendly game.

Sorry if you lost money on a BIDU trade, but you can make it back.

Johns, tell us how you really feel :-)

You said “If I were an analyst, I could get away with a lot of selfish stuff. For instance, if I decided one day that I wanted to accumulate a truckload of GOOG shares, I could simply issue a downgrade and scoop up cheap shares from panic-sellers. And then, after I’m done accumulating shares, I would just issue an upgrade, and sell all my shares back to the retail investors.”

Don’t they do that already???

What other reason would they have for their downgrades and upgrades, that are always so off the mark. My experience has been to always buy after a drop from a downgrade, and sell right after the run up from an upgrade.

It sucks when you already in the stock though. So I can see why you are so ticked off.

I am sure you’ll make it back up soon enough. Take care man, Rob

This is a very naive knee-jerk reaction to the analyst downgrade of BIDU shares.

Analysts play a key role of analyzing current & projected peformance of companies and present their objective views to their paying clientele.
Analysts have direct exposure (resources) to research companies, their competitiors, clients etc..So they are always making decision based on better information than you or me can get access to..They are as smart as you and me, but with better information resources…

Moreover, analysts are not allowed to have positions in the stocks they research. You must be kidding if you think that the PiperJaffrey or JPMorgan will let their analysts do that…,

A little bit of statistic I could get by googling…
In 2001, four California economists (Brad Barber, Reuven Lehavy, Maureen McNichols, and Brett Trueman) published the most extensive research on record of the performance of stock analysts. The researchers examined more than 360,000 recommendations from 269 brokerages and 4,340 analysts between 1985 and 1996. They found that the highest-rated stocks produced average annual returns of 18.8 percent, compared to the market as a whole over this period, which returned an average of 14.5 percent.

one thing i forgot to mention. merril lynch’s analyst, erica whittaker (shes dumb as a rock), on ELN has been reiterating sells on ELN since march. however, if you look at the institutional holdings for ELN, you’ll see that merril lynchs holding in ELN have been increasing dramatically in the last few months.

thats bullshit

institutions need to put their money where their mouth is. if they downgrade BIDU, i expect them to selloff their positions. if they upgrade GOOG, i expect to see them buying.

You could also look at today’s 28 point drop as just a normal fluctuation for this stock (noise). How about asking what changed with the company between August 5th and August 22 when it dropped from 150 to 72. Or between August 22 and yesterday with that 50 point rally. Don’t blame the analysts for this drop, this stock is nothing but a hot potato for momentum traders.

Excellent post.. The only thing worse then the scumbag analyst is the scumbag market maker. Your comment about institutions and analysts collaborating is spot on. You dam well better believe that analheads, hedgies, market makers, and scumbag journalists all sleep in the same bed. You better believe that downgrade had nothing to do with valuation and had everything to do with either bailing someone out of a short or giving them the homerun short. Take your pick. One of the reasons I almost never hold any Wall Street darling stocks overnight is exactly because of this. Jon makes a good point though; you have to know you are swimming with sharks on Wall Street. We can’t change the crooked game, but we can use the charts and play in it. Oh, I think trying to value any stock that doesn’t pay a dividend is a waste of energy. I don’t even look at fundamentals anymore I just trade the patterns and signals I like. Who gives a hoot what a company does, earns, is valued at, or is managed by? It’s all noise and stocks imho have no value whatsoever they’re not valued like bonds off of a metric system. Stocks are worth only what the next moron will pay you for it. Great fool theory.

I must echo Michael’s comments. What is “normal” for this stock is all relative to your bias and/or sentiment. For example, I was more wondering why in the world BIDU ran up 50% or more after having reported horrible earnings. Now I know… folks were trying to game the initiation of coverage on BIDU. At least these guys seem to be honest this go-round. Back in the dot-com bubble daze, a stock like BIDU would get roaring applause from analysts, especially the ones working for firms who sponsored the IPO.

Don’t blame the analysts, blame the stupid gullible investors who believe anything they’re told.

Johns, as an analyst I take offense to your post! Don’t get me wrong, I do think that there is still some trickery on Wall Street and that often analysts affect the market in negative ways (not to mention they are wrong often). However, many of the things that you wrote sound naive because they generally do not happen due to strict rules and laws such as those set out in Reg FD. The SEC has taken extreme measures to ensure that companies with research analysts do not cheat. There is so much compliance and disclosure that it is not an easy thing to do, and the punishments are so steep that the risk/reward cannot be justified.

The reason that BIDU was so strongly affected was because the investing public has (obviously) had trouble valuing the stock itself. I would agree that it is difficult to value and that Goldman and Piper are probably way off the mark. Nonetheless, they are professionals and people respect those opinions in their desperate search for worth. (I just wrote some long posts on BIDU and GS’s valuation of it, so people who are interested may want to check it out).

One bad thing I would say about analysts: I don’t think there is a lot of creative thinking in analyst reports because there is so much pressure to either be right or be off by the same amount as the analysts at your competitor’s firms. As a result, analysts often use very similar valuation methods, discount rates, growth rates, etc. and sometimes will get too caught up in what the consensus is that they will all miss a serious threat or opportunity.

Guy, chill out.

And wake up — the analysts and institutions they represent control the stock market.

And yes BIDU did change overnight — not the company itself, but investor’s expectations of its future growth.

And that’s what Wall Street and by extension - stocks — represent: perceptions and expectations, certainty or uncertainty, about the future.

Everyone knew BIDU was a dog, but small joe traders thought they could make a quick buck off the “quiet period” (when analysts can’t say a word about a recently floated stock)volatility …

And money day traders made, indeed.

Fast forward — when the underwriters themselves downgraded the stock, it confirmed that BIDU was way overvalued and part and parcel of the china fever syndrome.

I put a 60$ price target on the stock the day after the IPO.

I was personaly emailed by people thinking I was on crack.

I downgraded BIDU knowing that the stock would soar to new heights in the interim.

But today, BIDU is trading lower and lower.

The only hope for that stock is a Google buyout, which I expect to occur in the 4th quarter.

But otherwise, there is no reason to pay such a high multiple for a company that did 2 million in net income in 2004.

|| http://www.catablast.com || = equity research + stankin’ attitude

Hehe…. stoopid analysts.

But was ever thus I guess. :)

Slow down! Though there is always the liberal stock trader’s cynicism in the capitalist market for manipulation and exploitation by large financial institutions, your thought is indeed an overgeneralized and naive - typical of a UC Berkeley undergrad. Analysts in globally renknown institutions run the markets. Blogs and message boards have zero effect whatsoever on the markets. Besides, analysts from established institutions are professionals that specialize in analyzing the markets. Sure, its a given no one can predict unforseen events or natural disasters, but how can you blame them? If you have actually read any analyst reports, they resemble a scientist’s reserach paper with facts supporting their claims - not just simply stating their opinions. Moreoever, they even include disclaimers to validate their claims and ensure no personal bias exists for their recommendations. As for you, maybe it would be a good idea for you to read some actual analyst reports and do your DDs instead of scanning through web blogs or message boards before “investing” in any stock. Note I used “investing” and not “trading.” There is indeed a big difference.

Excellent comment. Great site

Just as the wall between analysts and corporate finance has been “strengthened”, fines were paid and morons like Blodgett put out of business, the SEC should turn its attention to the collusion between the prop desks and the analysts. Front running was going on in my days but not to the extent it is today. The hedgies who don’t care for analysis and as such dont pay for it get the best inside calls while the institutions who still fork out for independent research get stiffed again and and again. Objective analysis died with forced separation of corpoate and research. Analysts are now paid peanuts, don’t give the monkeys too much credit. an opinion

GTE stock went from a $1.94 to $3.83 when they signed a 600 million dollar deal with the country of Russia to supply wireless technology from a satellite, no not a satellite but an Amazing Airbus that floats 13 miles high. I think this stock will soar to $20.00 but more importantly , can you imagine if GOOGLE were to buy them out to take WIFI to anonther level. WOWOWOW.

Market Makers, hedge funds and institutions control the nasdaq and to a lesser extent the NYSE. They work together against the retail average joe. The notion that the nasdaq is supply and demand in its purest form is hogwash. But here comes the kicker: How many times have you jumped in a stock and see it reverse until it shakes you off and then starts zooming back again? Happens all the time and who do you think is behind this? You guessed it. Our frineds the MM,s, hedgies and institutions all working together. They know a retail trade when they see it . Don’t ask me how because I don’t know. They just know it and they know if you’re still in or have been shaken off. Ergo the 95% failure rate being touted for the retail blokes.

Hi Jim. Photos i received. Thanks

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