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#21
08-23-2007, 06:49 PM
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Re: Let\'s talk about Wall Street analysts
Diablo - yeah... I sort of read jws' post as referencing Blodget as some kind of authority on something so had a visceral reaction of "dude wtf."
In fact, he is the only guy during the boom that I actually had some real antipathy towards. Not the etoys guys, or the pets.com guys, or the random VCs that luckboxed (hi Hummer Winblad), only Blodget... my lord, what a jackass. -Al 
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#22
08-23-2007, 06:58 PM
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Re: Let\'s talk about Wall Street analysts
Al,
"the random VCs that luckboxed" I have a series of potential blog posts queued up discussing VCs with track records that show virtually no successes beyond luckboxing while following a total herd mentality (while not making any contrarian bets that succeeded, not having companies that are successful over the long term, not having companies they stand behind for a long time until they finally make it, not helping companies shift their business models to ones that work, etc.) Whether or not I find an appropriate venue to post them publicly is a whole different issue.
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#24
08-23-2007, 09:22 PM
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Re: Let\'s talk about Wall Street analysts
El D, Given the late nights, the often remarkable responsibilities given to kids out of school, and the remarkable volume of research produced, I'm always surprised more obvious eff ups aren't pushed out by the Street.
EDIT: I've only read derivative and fixed income sell-side research, not equities, but I can't imagine it's much different.
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#25
08-23-2007, 09:34 PM
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Re: Let\'s talk about Wall Street analysts
[ QUOTE ]
OK, we have some finance folks here. And a number of investors. I have a lot of thoughts on the research side of the investment banking industry. But this news today really says it best. http://www.alleyinsider.com/2007/08/...eekers-yo.html Mary Meeker, MD and head of tech research at Morgan Stanley issues a report on YouTube advertising. Other analysts made projections in the tens to hundreds of millions of revenue impact. Mary's number? An incredible $4.8 BILLION - nowhere near what anyone else projected. The article above shows that her team made an incredibly basic error and was 1000x off on their numbers. This team is supposed to be among the leading experts in analyzing financial information and is 1000x off due to a math error - that part is sloppy, but hey, stupid mistakes happen. But the fact that not a single person on the team has the intuition to say "Hey guys, this just FEELS wrong" is really mind-boggling. [/ QUOTE ] El D my friend, i must tell you. analysts are, above all else, human. i mean, it isn't like their math error cost the lives of say, 6 astronauts, now is it? [img]/images/graemlins/wink.gif[/img] i just hope she won't be applying to NASA anytime soon. Barron
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#26
08-23-2007, 09:36 PM
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Re: Let\'s talk about Wall Street analysts
[ QUOTE ]
El D, Given the late nights, the often remarkable responsibilities given to kids out of school, and the remarkable volume of research produced, I'm always surprised more obvious eff ups aren't pushed out by the Street. EDIT: I've only read derivative and fixed income sell-side research, not equities, but I can't imagine it's much different. [/ QUOTE ] the kids straight out of school producing the stuff you would read are way more qualified/smart/prepared/etc than those making equity reports .. no one with any other options would do equity research. even ones who have no idea why. so, in other words, i'm not surprised that what you've read is better than standard equity research, though i would be kind of surprised if much of it was actually useful, even if most has nothing really wrong with it.
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#27
08-23-2007, 09:42 PM
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Re: Let\'s talk about Wall Street analysts
[ QUOTE ]
so, in other words, i'm not surprised that what you've read is better than standard equity research, though i would be kind of surprised if much of it was actually useful, even if most has nothing really wrong with it. [/ QUOTE ] Over the course of a year maybe two things will be useful. Otherwise, you're reading it to get some market color and to avoid being caught off guard.
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#28
08-23-2007, 10:33 PM
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Re: Let\'s talk about Wall Street analysts
[ QUOTE ]
I wrote an article about the innumeracy of the press (specifically, the press covering the housing market) a while back. Some of the stuff I uncovered in my research was just staggering. One example I uncovered from a site that was dedicated to noting instances of innumeracy had someone who was advocating a slower speed limit assert that, in one second, a car moving at 55 mph travels 807 feet, or, in the words of the lobbyist, "nearly the length of three football fields." It's one thing to make the math mistake. It's another to not recognize that 807 feet is a very long distance to travel in such a short period of time at a relatively pedestrian speed. But to then take that data and then compare it to something that we can more easily understand -- something more than just a number -- and still not notice something is amiss...wow. I recognize that this is not about Wall Street analysts, but it's relevant enough to the OP, I hope. -McGee [/ QUOTE ] I do PR for tech companies. Earlier this year we pitched out a story based on a survey we'd commissioned about a common consumer behavior. I think I was more disturbed by how poorly equipped the executives at our client were to parse the survey data than in the comically credulous press coverage we got. Most people lack numerical intuition. scrub
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#29
08-23-2007, 10:44 PM
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Re: Let\'s talk about Wall Street analysts
I think what it boils down to is this. None of these so-called experts or analysts really know what they are talking about. A few of them might, but the vast majority don't. If you can spot the few that know what they are doing you can follow their leads to success.
However, I think it is much easier than that. Maybe I have an unnatural talent, but to me, it is extremely easy to see what stocks are going to outperform the market. Instead of investing in mutual funds, which will at best out-perform the market by no more than 3-5 percentage points, I prefer to invest in a group of high-performing individual stocks that can blow the market away by anywhere from 25-100% per year. Current examples are: NTDOY, GME, GKE, VMW. TTWO should also bounce back nicely. The moral of my post is this: The markets are extremely inefficient. Atleast much more so than the average Joe is led on to believe.
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#30
08-23-2007, 10:57 PM
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Re: Let\'s talk about Wall Street analysts
I think what is sad is that the only people who believe this stuff are retail investors. "Citi just put out a buy on XYZ stock, BUY BUY BUY!" From the retail investor point of view, it is understandable to buy and sell according to these expert recommendations. If you went to two or three doctors and they all said to do the same thing, probably you'd believe them. So the same thing happens in this investing too, which most people aren't proficient at.
Also, I disagree that sell-side equity research reports are useless. For companies that I skim or I'm interested in but I am too lazy to read the whole annual report and crunch the numbers, I like to get two reports from different companies, throw away the first page, throw away the analysis, and look at the news and figures. Sort of like a condensed report or something. More efficient, to me, than using screening tools (I suck at this) or reading the news for investment ideas.
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