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Technology Stocks : Smart Modular - diamond in the rough?
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To: David Evans who wrote (1986)6/29/1999 8:51:00 PM
From: Butch4327  Read Replies (1) of 2020
 
Ya know, there was a very interesting study done several years ago which measured the abnormal returns accrued by all the stocks recommended at the annual Barron's Roundtable since the late 60's (I believe) . . . anyway, what the authors found was that during the 2 week period between the actual roundtable and the publication date of the issue of Barron's which publicized the picks, the stocks DID have abnormal returns . . . but in the year following the publication, there were no significant abnormal gains. However . . . when the analysts made recommendations to SELL a stock . . . there WERE significant abnormal declines in the stocks' prices.

Other studies have theorized that this is because of the business environment in which analysts work . . . they believe that analysts are encouraged to author favorable recommendations to appease clients of the firms they work for. Therefore, they are more inclined to give favorable recommendations . . . and think MUCH more carefully before giving unfavorable ones . . . Anyway . . . take that for what it's worth! I'm not trying to put forth an opinion . . . just relaying what some PhD's have theorized . . . lol. It's still something interesting to think about . . . and it does make ya think about the relative validity of negative and positive analyst ratings and recommendations.

~Luc
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