This might be of some interest here...
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< THE CASH-KING PORTFOLIO >
Eyes on Kurlak
The role of sales analyst
by Tom Gardner (TomG@fool.com)
This is the good part.......
Fools, until we get a public account of these recommendations, analyst by analyst, how can we be expected NOT to believe that a primary reason for their being research analysts is to generate more transaction events and trading commissions for their firms.
Which brings me to the story of Tom Kurlak, the Merrill Lynch semiconductor analyst that Fools in our Intel Corporation (Nasdaq: INTC) stock folder know all too well.
Mr. Kurlak made a point not once, but twice, of sharing negative thoughts on Intel stock earlier this spring, citing increased competition from Advanced Micro Devices and pressure on the CPU side of the computer business in general. Our own Rob Landley, clearly now something of a pure expert on Intel (certainly in relative, and possibly in absolute, terms) responded to Mr. Kurlak's downgrade of Intel and his price target of $60 per share with the following comment, "Personally, I think the downgrade is bunk." Rob followed that along with an excellent point-by-point response to the Merrill Lynch downgrade (05/19/98: Fools on Kurlak).
This when the stock was at $79 1/2.
When Mr. Kurlak came out on Intel with negative comments and a $60 target price again (once more, right before triple-witching options expiration -- is there a regulator in the house?), your Cash-King Portfolio managers officially muzzled this analyst. We announced that Mr. Kurlak should make no more public comment about Intel until and unless 1) the stock hit his target of $60 per share (sans split); 2) he offered a public apology for being incorrect.
We were pleased, with the stock now at $113 1/2, that Mr. Kurlak confessed, in a recent interview, that (in his words) "I am human" with regard to his projections on Intel. We'll consider that an apology and agree now to listen to his future pronouncements (especially those not falling within a week of options expiration day).
And let me make it clear, we're not being critical because he was wrong. We're being critical of the general lack of accountability on Wall Street.
And so... until we get a clear appraisal from Wall Street about the performance of its research analysts, we are officially announcing tonight that in the Cash-King/Rule-Maker Portfolio, heretofore, we will refer to the Street's research analysts as sales analysts. We encourage you to do the same. They look too much to us like individuals paid to speak often, to change their opinions with the passing of a breeze, and to do so with not a whit of accountability for us to think of them as research analysts. Hence, we encourage you to either call them Sales Analysts (SA) or Conflicted Research Analysts (CRA).
And we've even given them stylish acronyms.
It is, of course, the application of accountability that we care about dearly in Fooldom. The Fool submits that the same sort of scrutiny that was applied to the Beardstown Ladies should be applied to all of Wall Street, broker by broker, fund by fund, in public fashion. The technology certainly allows it. The investment firms certainly have the resources to do it. Without it, how can we tell whether Kurlak's advice over the past ten years -- get in, get out, get back in, no get out, get in now, out now, here we go, back off a little here, etc. -- has been helpful or harmful to Intel investors that listened to him?
After all, over the past ten yeas, Intel has risen from $2 per share to $113 per share. I have to believe that the investor who bought, held, paid no commissions to Merrill Lynch, and who has delayed taxes throughout, is beating Mr. Kurlak handily -- without the hefty research (err, sales) analyst salary. Which has me asking you tonight what the average (not all of them -- there are some great ones) analysts' salary is for -- research or sales?
I have my answer.
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<ggg>
Barry
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