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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (37432)4/19/2010 2:56:44 PM
From: MCsweet  Read Replies (1) of 78764
 
Analysts vs stock efficiency,

I agree with Madharry that I think there is more opportunity/inefficiency in stocks covered by fewer analysts (or not covered at all). In the later case, you may be one of the few people have done homework on the stock. Every once in awhile, I am in a situation where I think I know about as much about the company as anyone else who is not in the company or a related party. That doesn't mean I always get it right, but my odds are usually better (IMO).

That being said, it doesn't make it impossible for the analysts to get it wrong or that there are no opportunities in stocks covered by analysts. In the case of ATPG, it appears to be a high risk/high reward stock, so it could generate a high return despite analyst coverage because it is perceived as a high risk stock.

MC
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