August 6, 2008

Analyst speak

Analyst recommendations -

Neutral – We are as clueless as you are about the future of the company, but I have to give some rating as I am being paid to do that.

Hold – Same as neutral

Buy – Holy Cow !! The stock price has gone up recently. Now that the whole world knows that the company is doing well, we are recommending the stock. Doesn’t matter if the company is overpriced …that is your problem.

Sell – (The opposite of buy ..literally and figuratively) Oh @##!! , The whole world knows that the company has gone to the dogs. The stock price has dropped like a stone. Better cover my ****.

Underweight or overweight – (Play of words) Means we are confused, but as we have to give some rating and have to generate some commision for the brokerage, sell a little or buy a little (we don’t care which, both will generate commisions for us)

I have nothing against individuals, but the profession forces honest, intelligent people to indulge in smoke and mirrors and put out garbage.


Anonymous said...

Hi Rohit
Just yesterday i came across this wonderful blog and I have started reading it from start. Your blogs are pretty good man, complex finance written in simple English.
I appreciate your efforts while selecting a stock for investment or making an investment decision.
I would like to ask you a question Rohit, What is your success ratio of selecting good stock? With all what you have written over here, anyone can have impression that in this bear phase you must be sitting on pretty good profit. reason: your value picking. Is it so? Have ever your decisions gone for a toss?

Warm regards

Rohit Chauhan said...

Hi ani
My stock picks have worked out 70-80% of the time.I had losers early on when i was new to investing for ex : SSI about which i have written in the past was a major loss.
However since 2002 i have not had major captial loss although in some cases the orginial thesis did not work out or was plain wrong and i sold out at a minor profit or loss.

In terms of performance i benchmark myself against the index. for me 5-10% outperformance is more than satisfactory. Again i take 2-3 years time frame to assess my performance. any shorter than that is too random.
i have met my goals in the last 10 years.

In the last 6-8 months my portfolio has gone down like others ..have no magic wand to prevent that. however as i watch valuations closely my losses in bear markets are lesser than the index.

the flip side is that i avoid momentum, sexy stocks and so never have eye popping gains. so overall i have decent gains with low risk


Vic said...

Loved your definitions of Analyst recommendations..:-) So true