HA! Predict? No way. I’ve studied my butt off to earn the Chartered Financial Analyst designation and was an analyst for nearly a decade and the best I could tell you is the general direction and how to hedge your downside if you’re wrong.
If you ever needed proof, follow analyst reports on stocks that are plummeting. Example Peabody Energy over the last year. Tumbled from $19 to about $10 a share. Morningstar analysts have constantly rated it a buy but keep dropping their price target (from $23 to $14 a share). How can they be nearly $10 a share off on the fair value of the stock in less than a year?
No one really knows. Best advice is to stick with a long-term strategy based on fundamentals and that delivers some income as protection.
We have previously posted on why you should ignore individual stock tips and this is one of the exact reasons. These analyst ratings don’t have any timeline, independence, accountability… yet investors take advice from them like they are gospel. Crazy stuff.
That was fun. I did horrible, but then again I’ve never claimed to know what the market is going to do. I’m 9 months into a 12-month experiment to see how the stocks I picked earlier this year are doing according to their analyst predictions. Its kind of an interesting study.
HA! Predict? No way. I’ve studied my butt off to earn the Chartered Financial Analyst designation and was an analyst for nearly a decade and the best I could tell you is the general direction and how to hedge your downside if you’re wrong.
If you ever needed proof, follow analyst reports on stocks that are plummeting. Example Peabody Energy over the last year. Tumbled from $19 to about $10 a share. Morningstar analysts have constantly rated it a buy but keep dropping their price target (from $23 to $14 a share). How can they be nearly $10 a share off on the fair value of the stock in less than a year?
No one really knows. Best advice is to stick with a long-term strategy based on fundamentals and that delivers some income as protection.
Exactly. Its like I wrote this comment myself! 🙂
We have previously posted on why you should ignore individual stock tips and this is one of the exact reasons. These analyst ratings don’t have any timeline, independence, accountability… yet investors take advice from them like they are gospel. Crazy stuff.
That was fun. I did horrible, but then again I’ve never claimed to know what the market is going to do. I’m 9 months into a 12-month experiment to see how the stocks I picked earlier this year are doing according to their analyst predictions. Its kind of an interesting study.
Thanks for the comments MMD.
Perhaps you’d be interested in our previous analysis of media “stock tips” and how they are performing in 2014 – it doesn’t make pretty reading:
Don’t listen to stock tips