Two comments on this thread.
1) If you assume a fair wheel, then red and black are
equally likely. The ball and the wheel have no memory.
A string of runs of one color are not only likely but
predictable. However, the likelihood of the next
run is unaffected by past runs. If the wheel is not
fair, then a string of one color might indicate a fix.
2) If an analyst (whether good or bad) sees that the price
of a stock goes well below what he or she considers fair
value, than the analyst should become bullish, barring the
belief that the company will die and the stock become zero.
Thus an analyst may hate a company, hate the business
segment that they are in, hate the present direction of the
market and the stock price, yet recommend the stock because
the value he or she sees there will eventually become
recognized and the stock price will rise from current levels
to meet that recognition. CONVERSELY, an analyst may love
an industry, a company, its future business prospects and
the overall direction for the market. But if the stock has
moved up so strongly that it is was overvalued given any
reasonable business scenario, the analyst should state that
the issue is overvalued.
My problem with analysts is that they don't seem very good
at seeing long term trends develop. They seem to me to be
very herd-like. Occaisionally you get advice like Micron
at the top or Iomega at the bottom that accurately tell you
what is likely to occur. That is from analysts who both do
their homework and have good judgement (and possibly a little
luck too.) As a long term follower of Intel, I was amazed to
see Tom Kurlak of Merrill Lynch advise selling Intel in the
50s and buying in the 80s (at least the second call was right,
but why would anyone believe he had any good insights after the
first call). The bottom line is still the same. Do your
own homework, trust your own evaluation. You may have better
information or better judgement than the analyst.
Good investing to all,
Burt |
