No Sign of `Sell' on Wall Street as Analysts Say: `Buy,' `Hold'
By Yalman Onaran and Christine Harper
SmartStops comment: Every self-directed investor needs to understand that research analysts are reluctant to ever publish an outright “sell” recommendation. To do so would risk alienating the corporate executives that provide the data and insight that good analysts need for their research. The hedge funds and institutions speak the same language as the analysts and know that in most cases a downgrade to “hold” really means “sell”.
Excerpt: Anybody who followed the advice of Wall Street's top-ranked analysts, none of whom would say ``sell'' for a single company in the securities industry this year, is reckoning with subprime-like losses.
Research analysts were unreliable guides during the collapse of the subprime mortgage market. They failed to foresee about $66 billion of writedowns that led to the unprecedented departures of CEOs from Zurich-based UBS and New York-based Merrill and Citigroup in less than six months.
Only 7 percent of analysts' recommendations have been sell this year, down from 11 percent in 2003, data compiled by Bloomberg show.
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