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Technology Stocks : Analyst Bashing (intc orcl mu amat csco)
ORCL 256.89-6.7%3:59 PM EDT
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To: j g cordes who wrote (26)12/24/1997 11:11:00 AM
From: GrokSoup  Read Replies (1) of 62
 
A thoughtful response.

As you say, analysts have their place; problems only occur when people forget what that place is and forget what pays their salaries. Analysts are not generally stupid or malicious (although both types exist, as they do in all occupations). They are just over-worked men and women who wake up every morning knowing that all day long they will be asked to do the impossible: explain short-term stock movements.

The preceding said, I agree with you completely about bandwagon effects and the perils of imputing more than average intelligence to analysts. All too often, downgrades amount to closing the barn door after the cows have already gone. It's a way of saving face and making sure that you have the "right" call on a stock when it's quarterly or year bonus time.

Bottom line: Caveat emptor. At long last, however, there are some tools to help you though. After years of having to decode the beauty pageant silliness of the Institutional Investor analyst ratings, at least the WSJ has taken things into its own hands. Its tracking of earnings estimate accuracy and stock performance on an analyst-by-analyst basis is yeoman work, if, of course, flawed. But it's far better than nothing.

Best.

P.
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