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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: DebtBomb who wrote (22521)	5/16/2001 7:58:26 PM
From: Dave Gore	Respond to of 37746

EYE-OPENER email I received for newbies re: analyst ratings. I won't say this is always as true as these guys say (and BTW, I know nothing of these guys), but it happens more times than it should. I bought ORCL today partly because it got a "neutral" rating a couple days ago and I think some big boys wanted to pick it up cheaper. I like ORCL for a 50% gain in 3-6 months. Boring now though. *** Greetings, While Flying V editor Christian DeHaemer was getting chewed out by our company lawyers last week for suggesting that the Wall Street money machine acts in its own interest at the expense of individual investors, the Washington, D.C.-based Precursor Group was out proving him right. A new study by Precursor declares the system that generates professional stock research "biased," "dysfunctional" and "broken." And it's costing you money... Investors usually assume that professional analysts are paid to give objective reports on companies. This is dead wrong. Company ratings are hopelessly biased, and the buy/sell recommendation system is so skewed that it has lost all meaning. Did you know that, out of 28,000 stock recommendations issued by big brokerages last year, only 1% were "sell"? In a year in which the NASDAQ lost 40%! Who's buying shares based on these strong recommendations? You are. And who's selling them to you? The investment firm that told you to buy them. They're laughing all the way to the bank with your money, which is what DeHaemer was trying to warn you about. There is an inherent conflict of interest in analyst reports, because analyst compensation is often directly related to investment banking business. The money doesn't flow directly from a company to an analyst's pocket (that would be bribery, now wouldn't it?), but instead turns up as bonuses and other shows of appreciation to the analyst's firm, as the bosses grow extra chins from all that underwriting. Under the current system, "analysis" is actually an elaborate form of sucking up to companies for their investment banking business. The system was fully endorsed by everyone at the height of the bull market, because everyone was making money. But the inconsistencies between analyst ratings and stock performance became impossible to ignore after the market tanked last year. Now, even the companies themselves admit they are having a difficult time pred! icting future performance. Not only that, but the Precursor Group's study rightly points out that, even if an analyst is trying to be objective, they're usually being spun by the company's PR people. Original research is hard work, and most analysts will settle for the company's version of the story instead of getting dirt under their fingernails. According to Precursor's CE, Scott Cleland, analysts aren't competing with each other to produce the best information possible for investors anyway; they're competing with each other for companies' attention. So when big investment firms come out with "strong buy" ratings on a company, Christian DeHaemer's eyes light up like it's Christmas. After all, he's not underwriting anybody. The Flying V doesn't even accept outside advertising. And you can bet that Flying V traders will be advised to short that stock, as all the suckers buy up what the big boys are dumping on them. To learn more about Christian and the Flying V, click here: www.flyingvonline.com/flyingvedgen/. If anyone would like to add to the editorial content of this dispatch, please write your comments on a US$100 bill and mail it to me, care of the Rambling with Integrity Foundation. Thanks. Until next time, Michael Riska P.S. One of our Rogue Trader members in San Francisco wrote to us today, saying, "I am mad and concerned about the likelihood of 3 hour blackouts per day in my block... Life is going to be very worrisome this summer, to say the least." Well, I hate to be the bearer of bad news, but not only are rolling blackouts likely, it's going to be worse than experts have predicted. In fact, a recent study on the state's energy supply and demand shows that California may experience a total of up to 11 days without power. And California Governor Gray Davis is so worried about it, he's already setting up emergency shelters for the state's elderly population. But as! the temperature rises in California, so do our energy crisis stocks. Headwaters (HDWR:NASDAQ) has gone from a price of US$2.35 on January 2 to a current high of US$13.00... a gain of 453% in five months. To find out how we saw this bull market in energy crisis stocks coming... and how others are about to explode to the upside, click here: www.roguetraderonline.com/rogueed0516.html