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Strategies & Market Trends : The Rational Analyst

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To: ftth who wrote (1186)	6/20/1998 2:04:00 PM
From: HeyRainier	Read Replies (2) of 1720

[ Analysts ] Dave, do you get the feeling sometimes that analysts' earnings projections are unreliable, or just plain stink? Why are there so many projections out there at are incongruent with the market's assessment of the company (via the stock price)? Hmm...thousands of market participants versus one individual's point of view. To add to that, that point of view can often be skewed towards a favorable rating, not because they actually think the company is going to earn more, but because they have a responsibility to try and earn that company's underwriting business. Why are analysts being paid such attractive sums of money when a number of them are so late to react to new developments? Only after a company has released an earnings warning will many analysts lower their earnings estimates. What value does that provide? By then, the stock is already down. ("Here's your paycheck. Good job on taking the initiative and lowering the estimates after management told everyone the bad news.") Just shaking my head at the lack of true initiative on the part of many analysts. Regards, Rainier

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