Re-writing History on Wall Street

by | Apr 3, 2007 | Asset Management

No wonder many people have lousy opinions of Wall Street folks.
Read on:

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.

Twenty Percent!

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.



Thomas Mullooly
Mullooly Asset Management LLC
Our Only Business Is Fee-Only Investment Advice

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