Analyst 'Sell' tips outperform their 'Buy' tips

[neversay]

Apologies if this has been posted elsewhere today...

Own goal as analysts' top tips fare worse than the stocks they recommend selling

"The stocks professional analysts recommend you should buy perform worse than the stocks they say you should sell, new research has found.

Stock broker AJ Bell found that the top 10 FTSE 100 stocks analysts most recommended fell in value by 17.3pc last year, worse than the index as a whole which fell by 12.5pc in a tough year for global markets.

More alarmingly, the shares they advised investors to sell actually performed better, falling by 10.1pc."


https://www.telegraph.co.uk/investing/n ... d-selling/

[OhNoNotimAgain]

That backs up the argument on a previous thread about fund managers.
And now we have the data to the end of 2018

In the 3 years to end December rated fund managers returned an average of 9.9% while all active funds had an average return of 11.1%.

However, the UK All Companies Sector, which also includes passive funds, returned 12.9%.

[EssDeeAitch]

With my record on buying individual shares, it seems I am suitably qualified to be an analyst

[GoSeigen]

Apologies if this has been posted elsewhere today...

Own goal as analysts' top tips fare worse than the stocks they recommend selling

"The stocks professional analysts recommend you should buy perform worse than the stocks they say you should sell, new research has found.

Stock broker AJ Bell found that the top 10 FTSE 100 stocks analysts most recommended fell in value by 17.3pc last year, worse than the index as a whole which fell by 12.5pc in a tough year for global markets.

More alarmingly, the shares they advised investors to sell actually performed better, falling by 10.1pc."


https://www.telegraph.co.uk/investing/n ... d-selling/

It just confirms that analyst forecasts on the whole are a lagging not a leading indicator.

GS

[johnhemming]

There is, of course, an interesting question as to the timing of analyst tips. It may be, for instance, that analysts tips when initially made are a leading indicator, but once they have been made are a lagging indicator. That, in one way, is why actually the target price is a better thing to measure to find out the accuracy.
Secondly, the UK market is dominated by brexit uncertainty at the moment. If you look at Lloyds (I am long in Lloyds)
https://www.hl.co.uk/shares/shares-sear ... -forecasts

A lot of the broker forecasts assume that no deal won't happen. The market, however, was not buying this in early January although now the prices of UK banks have been ticking up.

The problem with the various Brexit outcomes is that they are specific defined outcomes which make a big difference and to some extent binary (deal or no deal). That makes things difficult for analysts as they really need to make two forecasts on each scenario.

[richfool]

Yes, it depends on the timescale the tips are aimed at. Some brokers maybe looking at over the next 6 -12 months. Some maybe looking much longer term e.g. 2- 3 years.

[GoSeigen]

Yes, it depends on the timescale the tips are aimed at. Some brokers maybe looking at over the next 6 -12 months. Some maybe looking much longer term e.g. 2- 3 years.

It doesn't depend on the timescale. They are practically all lagging. Only one I've noticed that isn't is GDP forecasts. But actual GDP numbers are so slow to emerge that they themselves could be argued to be lagging...

GS

[johnhemming]

They are practically all lagging. GS

What is your data source for this or is it anecdotal.

[richfool]

Yes, it depends on the timescale the tips are aimed at. Some brokers maybe looking at over the next 6 -12 months. Some maybe looking much longer term e.g. 2- 3 years.

It doesn't depend on the timescale. They are practically all lagging. Only one I've noticed that isn't is GDP forecasts. But actual GDP numbers are so slow to emerge that they themselves could be argued to be lagging...

GS

My point was that the tips may not have come to fruition yet. Some, for example, might be aimed at a point in time after we have Brexited and a rebound in particular sectors has taken place. Thus they would be lagging until that time comes.

[LooseCannon101]

I am currently reading a book - 'The Long and the Short of It' by John Kay.

He suggests that it is better for an analyst to be conventionally wrong than to be unconventionally right. Most analysts are compared with their peers on a quarterly basis, rather than against a longer-term benchmark, and are likely to be laid off if they under-perform in two consecutive quarters.

I do not take any notice of analyst buy or sell tips. Trading only guarantees money for the stockbroker who is definitely not your friend.