Analysts – Do They Really Know The Stock Market?

When you become interested in a stock

or mutual fund you can call your broker and he

will send you reports on how the company is doing,

what their management is like and what might be

the projected earnings for the company and how the

industry is doing. Great information.

You will apply yourself to this mound

of papers to determine if you want to buy the

equity. You might also send for more reports from

independent analysts such as Morningstar. You will

become buried in papers. That is what the

brokerage company wants. The reason is very

simple. If you buy the stock after doing all that

research and it goes down instead of up they are

not responsible for your stupidity. Of course, if

it goes up they can take credit for providing all

that great information.

Now let’s think for a minute. You

received all that information that was already

printed so it could be sent to you. It makes me

ask when was that printed? How old is the

information? If I can get all this stuff about the

company it means that anyone can. What it boils

down to is the information is just that –

information and none of it will tell you that the

stock will go up further because the whole world

knows.

These brochures are made to help you

BUY not SELL. In my years of experience I call

them a work of fiction. No brokerage company is

going to issue a bad report about a company at

least until it is ready for bankruptcy and by then

your investment dollars have disappeared.

I know your next question. If I can’t

rely on those reports how am I going to buy

anything? There is a better way. You will want to

see the price action of the stock or mutual fund.

All stocks undulate as they go up or down and you

want to know the major trend.

On the Internet you can go to a web

site and type in the symbol of

the stock or fund and request a weekly chart going

back for about to 5 years. What you are interested

in is what is it doing during the past 6 months to

one year. If the trend is up it is a buy and if

the trend is down or sideways don’t buy it or if

you own it sell. See how easy that is. Brokers and

financial planners won’t like it because it takes

all the mystery out of buying stock and they don’t

want you to know this simple procedure.

Analyst reports give you lots of

useless information, but will not tell if the

stock will go up after you buy it. If it isn’t

going up don’t buy it.