International Investing

Gekko’s comments in the movie Wall St. still ring true, “They’re analysts, they don’t know preferred stock from livestock, alright?” Businessweek sums up a new book which details how little respect should be paid to the dart throwers:

McClellan, admits that price targets are “fiction,” and buy/sell/hold ratings aren’t taken seriously by professional investors. Analysts spend perhaps only 20% of their time on research and the rest on marketing and other tasks, he says. They create sophisticated computer programs to track a company’s earnings, revenue, and cash flow in close detail. But the results are “not accurate at all,” he says. In fact, analysts often miss big trends and have a terrible record as stockpickers.