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Pastimes : Q&A on SI's New Feature: Investor Sentiment

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To: John Busby who wrote (33)1/9/2003 4:34:16 PM
From: Edscharp  Read Replies (3) of 82
 
John Busby,

I might take this investment sentiment thing seriously if you had a panel of 50 prominent brokers who were utilizing their considerable knowledge and intuitions to make comment about a variety of companies.

Instead, this endeavor you are attempting seeks, for the most part, the opinions of lay investors who have not the experience nor expertise to validly assess financial statements, stock reports and press releases much less a sudden shift in market conditions. Furthermore, as noted elsewhere, you have a small community here at SI and therefore a very small sampling of opinions for each stock. Not only is this unrepresentative, but it would be quite easy for a small group of persons to skew the results for their own purposes.

What is the value of a small sampling by non-professional investors really worth? Do you believe this would have any predictive value at all? I'm reminded of what investor sentiment must have been during the height of the technology boom. I bet the bulls predominated right up to the moment the bottom fell out of the market.

You made the point about biases in press releases and financial statements. Fair enough, sometimes biases and downright dishonesty do creep into these things. On the other hand, my bet is the majority of companies with earnings make an earnest attempt an honest reporting. I don't see how you can compare these types of biases, an intentional or unintentional deception to ones stockholders, to the kind of biases people will express informally and anonymously over the internet.

Investors with some savvy will ignore your investor sentiment reports. Unfortunately, some lost investors will take the report seriously. They'd be much better off watching Louis Rukeyser once a week.
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