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Article: Dorfman: Analysts' stock picks often duds
- Article from:
- Tribune-Review/Pittsburgh Tribune-Review
- Article date:
- September 29, 2009
- Author:
CopyrightCopyright 2009 Tribune-Review/Pittsburgh Tribune-Review. Provided by ProQuest LLC. (Hide copyright information)
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The more Wall Street analysts like a stock, the less interested I
am, as a rule.
Unlike birds, which often flock together for long, uncannily
accurate flights, analysts frequently head in the wrong direction
when they follow each other.
I have 10 years of data, accumulated in real time, to suggest
that the stocks analysts love the most usually do poorly.
From 1998 through 2007, the four stocks rated highest by
brokerage-house analysts at the beginning of the year dropped 1.7
percent, on average, in the ensuing 12 months. The four stocks they
rated lowest gained 2.2 percent. Neither group beat the Standard &
Poor's 500 Index, which had an average annual gain of 7.2 percent.
The pattern ...