Thanks for the reponse, Edscharp. I agree with a lot of what you're saying.
Here are some thoughts I have on the "lay investor" vs. the "broker":
* Your profile of the typical broker may be a bit generous. It's tough to envision a research report or opinion by a broker to be without any vested interest or bias whatsoever, and to be driven purely by the desire to make money for the lay investor. (I don't want to overemphasize this point, I read brokerage reports and probably have less distrust of Wall Street than the average investor.)
* On the other hand, the lay investor's profile may be a little harsh. I read SI in part for some savvy investment opinions, and pay more attention to them than a talking head on CNN. Of course, there are ample threads on SI dedicated to pointing out the other side of the coin... bashers, spammers, dubious investment advice, and so on. (I should also note that some of the advanced features in the premium area include 25th and 75th percentile bands and other ways for investors to evaluate an investor sentiment chart.)
* Ultimately, even if we assume it's true that lay investors don't analyze financial statements and stock reports properly (if at all), I'm not sure that discredits their opinions on the stock. Their influence on supply and demand is still a contributor to the stock price.
It's the same reason why so many terrible Hollywood movies make $100 million at the box office. Someone is going to the theatres. Of course, that's another story...
* Isn't "broker/analyst sentiment" already factored into the stock price? In many cases, an upgrade or downgrade is immediately followed by a move in that direction. Seems to me people come to message boards to discuss what's behind published reports. This feature is an attempt to channel that.
Thanks for your time,
John |
