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Split Personality Stock Analyst


splitpersonalityInvesting is hard enough without your stock analyst/ expert giving you two very different opinions about the same stock in the same report.

The brokerage can send you their analyst reports that they come up with each trading day. Sometimes, it is just for entertainment. Like the one I received today.

When I saw the first part about Genting Singapore being an ‘outperform’, it felt good to have just bought some shares of that yesterday. Then I fell off my chair when I saw that in the same report, it recommended you sell it.

It’s like going to the casino and you buy both the red and black colours.

The only way the analyst will be wrong on this counter is if the stock went sideways and don’t move. And it could. I kid you not. I once bought a counter that never moved for a year in terms of its price.

I have a problem that when the stock analyst give their target price and opinions, it is often without regards to the timeframe that they are looking at. For example, is their opinion valid for just 6 months? Or is it one year target? Because it makes better sense if you analyse it technically and say that it points to a short term move downwards but in a year or two timeframe, you expect the prices to be this much higher.

More importantly, it fits the analogy that Warren Buffett’s mentor, Benjamin Graham, said of stock markets:

In the short term it is a voting machine, but in the long term it is a weighing machine.

So, the people who trade stocks professionally may not have as big an advantage over you and me.     

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