go-Digital Blog on Digital Marketing

A Truly Embarrassing Chart For Wall Street Stock Analysts

Source: http://www.businessinsider.com/this-chart-shows-why-wall-street-stock-ratings-are-a-joke-2012-2

Only five percent of ratings on companies in the S&P 500 are sell ratings.

That’s right: 95 percent of ratings tell investors to hold or buy and only 5 percent say you should sell.

The following chart comes from FactSet via Cullen Roche:

Henry Blodget recently offered a few reasons why you rarely see sell ratings:

• Most stocks–especially growth stocks–generally trend up over the long haul, so saying SELL often means betting against the odds and/or making a short-term timing call.

• Stocks with excellent fundamentals don’t often go down just because they’re “expensive”–instead, they just get more expensive. So saying “SELL” based solely on valuation often sets the analyst up to be wrong.

• The lack of SELL ratings makes SELL ratings sound like a complete condemnation of the company, to the point where it seems the analyst has a vendetta against it. The more polite way to tell people to sell, most folks on Wall Street whisper, is to say “hold”–or just ignore the stock altogether.

• The issuance of a SELL rating often drives a stock down, hurting investors who own it. These investors will not usually say “thank you.” Instead, they’ll want your head.

• Most investors are long-only, meaning they can only buy stocks, not short them. Thus, “SELL” ratings are only useful to hedge funds and investors who already own stocks.

• Most companies refuse to talk to analysts who hit them with SELL ratings, thus reducing the analyst’s ability to gather information about the company.

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See Also:

• The Nationwide Mortgage Settlement Protects Banks From Some Litigation, But Here’s Where They’re Still Exposed
• PRESENTING: The Most ‘Liked’ Wall Street CEOs
• SHOCKER: Wall Streeters Are Juicing To Be Better At Their Jobs

Here are the top ten in his poll of 25 (hit his site to see more).

• think outside the box (16%)
• circle back (15%)
• synergy (14%)
• it is what it is (13%)
• touch base (13%)
• at the end of the day (13%)
• let’s take this offline (12%)
• low-hanging fruit (11%)
• value-added (11%)
• proactive (10%)

If you know anyone who uses these phrases feel free to show them this post. You can’t blame the words, but it’s worth keeping your language fresh and cliche-free when possible to avoid weakening the point you’re trying to make. You’ve heard my take (and Meeting Boy’s), but let’s hear your most hated work cliches.

The Most Hated Buzzword | Meeting Boy

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