Actually, there were a number of upgrades when LSI was in the twenties, so these have been very good calls. The exception as noted by Addi and others has been the visionary Erica Klauer's buffonary, wherein she changed her rating from a buy to a hold when LSI hit 12. Nice timing Erica, you self righteous self absorbed--former analyst of LSI who was replaced on the LSI account by her company, Alex Brown. (Now that's the hypocrisy of which you speak, but who would ever want to follow Erica's call on LSI again). (Oh I know--Jim Jubak)
Currently, there are still a number of analyst holds on LSI, and I suppose that there could be a charge of piling on, but once again Dipy , you are showing your lack of true understanding of the market.
The semi industry as many on this board know, is volatile. Even insider purchases reflect an inability of "those in the know" to predict an absolute bottom in the market. Thus, it is very difficult for even the analysts to make outstanding calls in this industry. Indeed, because of both cyclicality and product innovation, it is probably as tough an industry to make an accurate call as any. As such, a lot of analysts will sit on the sidelines with a hold recommendation until they can truly be certain that a semi company is really looking forward to a couple of quarters of increased profitability. The buzz word in the semi industry is "visibility", which refers to actual orders--not design wins, which is something LSI has a ton of, but which is often 12 to 18 months ahead of the first order, is three years before the peak orders for the product, and often results in no orders as is the case with LSI ATM business.
Of course, analysts know this, just as they know that by the time visibility going two quarters forward comes along, the stock price of a semi company has significantly appreciated, just as it has with LSI. However, there are a number of conservative analysts who believe (or whose firm believes) that the best way to play a semi stock is to wait for the assured visibility to issue their recommendation of buy and to issue a sell(hold) the moment visibility is less certain. (The last time LSI had such visibility was in early '95) This will most likely result in smaller profits in a semi investment but also smaller losses. And as we all know a loss of a $1 is twice as painful as a gain of a $1. One other concept to keep in mind, which is why I believe that one can outperform analysts. They like to keep their jobs. As demonstrated on this board, everybody remembers Erica's goofy call, and you can be darn sure so do her customers. So an analyst does want to stay with the pack as a rule. Only on the margins will an analysts want to stray. Become too bold, and you will be working for hedge funds as an analyst. I would think for a supposedly conservative investor like yourself, that you could grasp such a concept rather than taking cheap pot shots at analysts who are working within the constraints of their jobs. (At any rate, you have given this thread your six picks to click for the upcoming year, which we all hope will outperform the minus ten percent performance of the last twelve months.)
Indeed, there a number of firms who eschew investment in the semi sector because of its high volatility, and as a result, almost always have a hold on semi stocks--no matter how attractive the industrys' outlook. One example that comes to mind in the PC business is ML's view of DELL computer. ML almost always felt that the PE for DELL was too high, and as a result ML's investors missed out on some big-time profits.
Finally, a word about your claim that analysts are in a "deliberate attempt to mislead the little guy". That view of course is asinine, goofy, and dipy--Dipy--for the most part.
For example, if you wanted to open an account at Goldman and Sachs, you would need $5 million--minimum--unless you are an aggressive trader, in which case they will "settle" for $3 million. It's been my experience that people who have that kind of money to invest aren't fools and aren't about to led astray by some analyst as you suggest. Yet there are two notable things about Goldman's analysts who are usually the best paid in the business. First their year to year performance as a group is always among the best as compared to their peers at other firms. However, their recommendations usually mirror other analysts at other firms, but are a little more timely rather than dramatically different. In short, you get what you pay for.
Finally, as I have already noted, the single greatest factor that does account for a rise in a stock's price is the analyst's recommendations as it pertains to a stock's future prospects (earnings).
On the other had, I have no doubt that prized customers are given information that others aren't. But my experience is that prized customers are the ones who ask the extra question, who take the second look, and who generally are the most informed. And being informed is something that one truly needs to be if one truly hopes to outperform the market. Not to attack you Dipy, but you say that your largest single holding is LSI, yet I have never ever seen a single post of yours that even remotely demonstrates that you know anything about LSI's business, and that is that key to making money. Rather than following some formula that really applies much more to other stock groups, you may want to sit down and analyze LSI's current position in terms of its 12 to 18 month prospects. Perhaps you can tell this thread why LSI is not an outstanding investment going forward, and what other areas look more promising.
In short, Dipy, you are simply wrong when you attack analysts. Unless of course, you can provide this thread with a book about the long-term recommendations of analysts being counter-productive to an investor's well being.
Other than that, I'm afraid that the nostrum that analysts are con men belongs in the same category as "The Police Officer said that if he hadn't been drunk and had been wearing his seat belt, he would have been dead" category. |
