Analysts\' recommendations are good?

Mel
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14 years 4 months ago #1902 by Mel

Analysts\' recommendations are good? was created by Mel

One view from another forum: *** I don\'t know how analysts based on issuing a buy or sell call. Sometimes they issued for their own interests, eg. to sell or to buy. Well though they might say caveat emptor, but I remembered hit many times by buy calls which can make you stuck for several years. The law should make these people responsible because we are expectant of responsibilty socially and ethically. *** My view: If you read analyst reports, they give their basis for their \'buy\' or \'sell\' recommendations, and the basis for the target prices. So you should have information on whether it\'s by PE, what PE, how it compares with other listed companies in the same industry. there are many other metrics to consider, such as ROE and NAV. if it\'s a dividend yield play, then you can see what sort of yield is being forecast, and what forecast model (DCF, for ex) the analysts use. Analysts reports do discuss these things. So I think it\'s not sensible or rational to say must have law to \'make these people responsible\" for their recommendations. On the other hand, what is vital is for investors to educate themselves continuously about stocks and valuation. I welcome other views

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shower246
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14 years 4 months ago #1905 by shower246

Replied by shower246 on topic Re:Analysts\' recommendations are good?

In the past, there is a stock which I owned. So I notice the stock carefully. There is a \"Sell\" call by an analyst/brokerage house, and the fair value judgement, stock price is far far below of the current price. It will make you \"Cry\", if you happen to own the stock at that time. But in the coming year financial report, under Top Twenty Shareholders, the analyst/brokerage name is in it, and own decent percentage. Previous year, Top Twenty Shareholders, their name is not on it. I can\'t help wondering, is there conflict interest in the analyst report? Anyone care to share, why analyst/brokerage can give analysis, yet can buy share? Is there any goverening rules/law to protect the interest of the consumer, whom read the analyst report?

We buy the shares of the company with our hard earned money.

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Mel
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14 years 4 months ago #1906 by Mel

Replied by Mel on topic Re:Analysts\' recommendations are good?

shower246: I sympathise with you. Which stock is it? Please name it so I can better understand and explain the situation to you. As for the brokerage\'s name appearing in the annual report, it could be the broker holding the shares on behalf of clients. Very common to in annual reports, because all brokers hold shares for clients who use their margin financing, for example.

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shower246
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14 years 4 months ago #1912 by shower246

Replied by shower246 on topic Re:Analysts\' recommendations are good?

Dello: Thanks for your concern and info. share. Better understanding now. :cheer:

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MacGyver
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14 years 4 months ago #1919 by MacGyver

Replied by MacGyver on topic Re:Analysts\' recommendations are good?

Analysts\' reports are used to generate sales, which is the bread and butter for broking houses. If you don\'t do your homework and trust the reports so much, you are just dumping money into the sea. If you happen to meet some of the analysts, you will be shocked at their youth. Some are barely 30s and they claimed to be experts in the industry. Even some friends of mine who worked in that industry for donkey years don\'t dare to claim to know eveything. If you are buying a handphone, you will compare brands, models and prices before buying. Do the same for stock buying. Do your homework before you invest. You are responsible for your own actions.

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MacGyver
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14 years 4 months ago #1920 by MacGyver

Replied by MacGyver on topic Re:Analysts\' recommendations are good?

For your information, I can still dig out a couple of research reports on Olam in January this year. These are reports from foreign houses who claimed to be much more \"sophisticated\" than Singapore houses. These analysts are calling for a \"SELL\" on Olam because of thin margins and high borrowing costs. In came Temasek as a shareholder of the Company and immediately, the tone of the reports changed. The reason ? Maybe the business climate changed overnight or maybe they are trying to get business from Temasek. You decide.

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