Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Lucretius who wrote (1706)	1/7/2000 4:49:00 PM
From: MythMan	Read Replies (1) \| Respond to of 42523

LOL! and we should be hitting new highs with the A/D line in the toilet. This market is all f*cked up and new high stuff is meaningless.

To: Lucretius who wrote (1706)	1/7/2000 5:17:00 PM
From: Just_Observing	Read Replies (3) \| Respond to of 42523

There is a new phenomenon in the market which needs to be looked at. This is the specialized mutual funds like the Biotech and Internet fund at brokers like Merrill Lynch. Consider Dr. Hecht, the Biotech analyst at Merrill Lynch. He does his job well and would speak candidly about any stock that he follows. However, his favorite stocks are now in the Merrill Biotech fund. Hecht cannot come out and downgrade any of their holdings in their own biotech fund. So all Hecht can do is keep quiet with this "mania" going on. For example consider IDPH. The stock has doubled from the last fortnight of December from 55 to 108+ on no fundamental news (prices adjusted for the split). The stock has easily surpassed Hecht's 12 to 18 month target of 82.5. Yet, he maintains a 1-1 rating on the stock. Also, note that Henry Blodgett, Merrill's internet guru will not speak negatively about any of their internet holdings. Thus, analysts have been reduced to touts. They can tout a stock but can never downgrade based on price or performance since their companies mutual funds will get hit. In the past, brokerage houses upgraded and downgraded stocks to earn commissions from trading. Now, the commissions from trading are razor thin. So the only way to make money is through management fees of specialized mutual funds. And the fees can only come in if these mutual funds perform well. And that can only happen if none of the stocks in those funds are downgraded. It will be interesting to compare the number of upgrades to downgrades every year over the last two decades. Can you ever get an objective opinion on a stock from an analyst whose paycheck is tied to the success of their company's strategy? I think not. And the evidence can easily be found by looking at the downgrades coming from brokerage houses. I bet that Merrill will never downgrade any of their core holdings unless confronted with a spectacular debacle such as a Lucent. The brokerage houses have become the pied pipers leading greedy followers to their doom. However, this process could take months, and even years to wind down. And the brokerage houses may make many hundreds of billions for themselves and their followers before the reckoning.