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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (3394)	2/20/1999 10:16:00 PM
From: David Bogdanoff	Read Replies (2) \| Respond to of 15132

P; The methodological problems of analyst ratings are considerable. For example, Hulbert does not rate newsletters unless they meet certain standards of clarity and then he tries to calculate their returns on the basis of the way the subscriber can impliment them in practice. After a stock recommendation, Hulbert uses the opening price of the next day's for that stock, on the presumption that a subscriber would not be able to get to a broker and purchase a stock the same day the recommendation was made. On CNBC recommended stocks shoot up even as the guest analyst mentions their name. I recall a study published in the WSJ some 30 years ago which showed how stocks recommended by the guest analyst on Friday's program actually started going up about 5 days before the program, peaked on Friday, and then stablized or even slightly declined in the following weeks. Investors who knew the analyst list of recommended stocks were buying in anticipation of his Friday appearance! I really don't know what to make of analyst's recommendations on CNBC (or anywhere else) since they often have a conflict of interest based either on the portfolio under their direct management, their clients' portfolios, or the investment banking department if they work for a brokerage. Many informal studies have shown these conflicts to result in bias in recommendation. David