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The mission of an analyst
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10/25/2002
The public respects, welcomes and adores good analysts; the more, the better. The media gives generous coverage to their scholarly comments, views, and recommendations - be they Bearish or Bullish, for reputation or other forms of reward. Devoted followers, mostly small investors, read, listen and watch piously.Such golden rules are literally on the lips of everybody: "when bullish go long, when bearish go short"; "buy low and sell high; not too greedy when the Bull gallops and not too panicky when the Bear shows its teeth". However, does such diligent attention result in cash gains? What actually happens can run contrary to what they are supposed to expect. What really works can be the opposite of what the ruthless direction of daily trading indicates. Small traders, led by the nose by "good advice", tend to be the losers, with their individual accounts trickling into big players' bottomless pockets, and mostly unappreciated at that. The small players not only experience financial losses, but also suffer emotional ups and downs. It is not that the analysts are being blamed or criticized: investors should exercise their own judgment. It must be realized that the job of analysts is not to make sure that you gain, but to give you advise. Their job is not to foresee, but to learn from hindsight. They serve either as drum-beaters/trumpet-blowers ahead of the "Bull" or to explain what happened when the show is over, encouraging investors to aspire for a rebound. Easier said than done. If things were that easy, everybody would become a millionaire. No miracles! Mr. Bear always runs whimsically and lingers endlessly. Mr. Bull seldom makes his appearance. Once in a very long while, say once a year or as luck would have it twice a year, the Bull releases its long subdued energy, then universal joy and happiness prevails. This uneven distribution of "Bullish" versus "Bearish" tendencies makes the task of the analysts both an easy and an uneasy one. Easy because more than enough information and technical resources are at their ready disposal. Every tiny bit of news, every event big or small; any hint or rumour from anybody can be utilized in their calculations. All the sophisticated techniques and theories relevant to market phenomena can be cunningly employed, as if the path of the market exactly follows predictions. Yet difficult because the "Bull" is so short-lived, to predict that the "Bull is coming", to advocate "going long" is the happy and easy side of the analysts' task. However the stubborn "Bearish" days are too common to count. Therefore one has to pump up the "balloon" to keep up morale, one has to list good reasons for repeated and endless lows, one has to satisfy the queries of the complaining masses. Above all, the analyst's identity and credibility can be at risk. People can be gullible, yet only once or a few times. Once public favour and trust is lost, the analyst is no longer believed, his image stained and smeared, and his prestige emptied into the gutter. If he doesn't care, then the scenario is totally different ... Quite a number have disappeared ignominiously. When the analyst is open and above board, or, in other words, when he is indeed as he proclaims at the end of each comment: "without material interest whatsoever in the above-mentioned subjects or above recommended stock(s)", then he is doing right. He can sleep well with a good conscience, deserving of popular respect.
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