�

Industry Analysts

Analysts, who are these people and what do they do.� Some analysts are highly intelligent and with others you sometimes wonder. Some are highly outspoken and others are merely meek bean counters that diligently perform their jobs and go home.� Most of the �analyst�s ratings� referred to in the industry are from a group of many hundreds of analysts that work for the large recognizable brokerage firms.� There are many more analysts and many more brokerage firms but their comments get lost somewhere, probably at some editor�s desk where if the firm�s name isn�t recognized they get tossed aside.� Some analyst�s experience can be counted in minutes and others in multiple decades.� Some analysts make earnings projection for the companies they follow and others don�t.� Analysts may focus on a specific sector of the market such as healthcare, technology, or retail, while others focus on the market as a whole.� An analyst may follow just 5 or 10 stocks, or many hundreds of stocks.� A firm may have a handful of analysts or several hundred. �Analysts may be quick to upgrade or downgrade a stock or they may do as two big-name firms recently did and wait until a $60 stock plummeted to just $4 before shifting from their Strong Buy recommendation.� Whether their comments are accurate or well founded, a few analysts are revered as almost gods.� When they say reduce your equities allocation by 5 or 10 percent you�d better be careful if you want to single handedly disagree with a 600 mph bulldozer.� Some times the question is raised of the news media: do they report the news or do they create the news?� The same question is sometimes asked about analysts: do they comment on stock moves or do their comments move stocks?� Abby Joseph Cohen of Goldman, Sachs & Co. placed the last straw on the camels back this spring when the high priced tech and Internet stocks began their fateful dive.� Investors sometimes need to be concerned about analyst�s comments.� Just as the Federal Aviation Administration is given the role of policing the aviation industry they are also given the task of promoting it.� Many analysts have the task of cheerleader at their firms.� They have the responsibilities of finding new stocks to cover.� This coverage in turn results in the sales force pushing to customers the stocks with newly initiated coverage or that have been recently upgraded.� This can be good because an analyst or two upgrading a stock can have the effect of having the sales force at two firms pushing the stock to their clientele.� There can be a downside to this also.� It can be difficult for an analyst to change their opinion on a stock when all the firm�s clients just added it to their portfolios.� It�s also difficult to make negative comments on a stock your firm holds large quantities of when the firm would like to sell it to customers.� Analysts� ratings may be a simple buy or sell, or they may fit into the traditional strong buy, buy, hold, sell, strong sell framework.� You may have noticed few analysts issue a sell rating on the stocks they follow, so a few fresh hold ratings on a stock are usually analogous to sell ratings.� Some firms have terms like accumulate, speculative, near-term, long-term, neutral, and many more terms that are linked together in a myriad of ways and have an untold number of different meanings.� How they are interpreted depends if your analyst is paid to provide unbiased research or is paid to push stocks.