The Business section of yesterday’s New York Times had an interesting article in it, pointing out that during the current stock market downturn the typical Wall Street analyst recommendation has been “buy” not “sell.”   A similar study of any other downturn would likely produce the same results.  Why is this?

There are lots of pragmatic, institutional reasons why it’s so difficult for an analyst to write “sell” (more about this below).  Also, as investor sentiment indicators–which are invariably most bullish near the top and most bearish at the bottom–illustrate, it’s psychologically much harder than it might seem to either buy low or to sell high. Ff there may not be much information in the analyst recommendation, then, what are the really useful parts of an analyst’s research report? Continue reading →