No wonder many people have lousy opinions of Wall Street folks.
Written in Barron’s March 5, 2007 issue, Bill Alpert noted that nearly 20% of “Analyst Recommendations” over a ten year period from 1993-2002 were changed — after the fact.
As a result of the changes, the recommendations seemed to be 15% to 42% better than what actually happened.
In my experience, it made me sick to watch analysts make changes to their recommendations — then see them use the closing price from the night before — rather than the open price (which would be the first chance you could buy or sell the stock).
For example, if a company releases terrible news after the market closes, the downgrade would often cite the previous day’s 4 pm closing price — rather than the lower opening price the next morning — when the downgrade was actually issued.
This is another reason why we want to eliminate the “noise” surrounding a stock…and just follow the supply/demand in a stock or mutual fund. If there are more buyers than sellers, prices must rise.