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Zwei "Gurus", deren Namen man sich merken sollte: H. Blodget und Meeker. Gegen Blodget läuft übrigens gerade ein Ermittlungsverfahren eines Kleinaktionärs betr. INSP: http://www.individualinvestor.com/boards/posts.asp?boardid=4… ---------------------------------------- Many traders are already aware of the games some pros play to separate them from their money. As traders, we know that market makers and specialists will play games such as running the stops, artificially gapping stocks up or down at the opening, and acting as The Ax on certain stocks. But these games pale in comparison to the games many Wall Street analysts play on unsuspecting retail investors and novice traders. Some of the most notable offenders have been identified in the press, including Paine Webber analyst Walter Piecyk for his $1,000 a share price target for Qualcomm in 1999. To his credit, he did lower his price target to $200 a share in 2000, but it was too little and too late. The press has also had a field day with Henry Blodgett, the Merrill Lynch analyst who put outrageously high price targets on Amazon.com (AMZN) when it was trading at $250 a share. Then we have well-known Internet bull Mary Meeker from Morgan Stanley who told people to buy Priceline (PCLN) when the stock was trading at $165 a share in 1999, repeated her recommendation at $78, and then again on the way down until Priceline fell to less than $3 a share. Forget about traditional stock valuations based on earnings, she said. Morgan Stanley and Meeker both made millions in fees that year. Another brilliant Meeker call was recommending WebMD (HLTH) when it was trading at a little over $100 a share. It now trades for less than $10. To be fair, other analysts weren`t quite so bullish, including Jonathon Cohen of Merrill Lynch, who wrote in September, 1998: `In the next 12 to 18 months, we expect Amazon to trade for something less than $50.` It is ironic how analysts like Meeker and Blodgett got all the publicity and were paraded around on television while Cohen`s more accurate price target was buried in a research report that barely saw the light of day. Actually, it is not so ironic. It is the way Wall Street does business. Basically, the investment banking divisions of the major brokerage firms raise money for companies that need cash, so they strongly encourage their analysts to be bullish on companies the firm represents. The bottom line: Most analysts are not going to say anything controversial or negative about a current or future client. In a scathing report on how analysts do business, CBS 60 Minutes interviewed Tom Brown, fired from Donaldson, Lufkin & Jenrette (now CFSB), who revealed some of the secrets behind analyst recommendations. `I don`t know frankly how some of these analysts live with themselves,` he said at the time. He said it was hard to look at himself in the mirror knowing that he may have caused some people to lose 50 percent of their retirement money. `They really are cheerleaders,` Brown said of analysts. `The investment banking group wants you to be wildly bullish about everybody.` In a twist to the whole sorry mess, the father of Jonathan Lebed, the 15-year-old boy who made a half million dollars pumping and dumping penny stocks, defended his son`s actions by pointing out that his son is just emulating the actions of these high paid analysts. In an article published in the New York Times magazine section, author Michael Lewis pointed out that even a 15-year-old boy could figure out how the system was being run. The biggest analysts on Wall Street were artificially lowering their estimates for the companies they represented so the companies could then beat the whisper numbers. In the middle of an excessively bullish market, stocks were flying on the news a company beat analyst expectations, which then gave the analyst a reason to issue another upgrade. It is rather obvious that individual stocks are being manipulated by savvy pros who are using 24-hour financial news programs to pump the companies they represent. At least the SEC charged someone with a crime, but you have to wonder if they are looking in all the right places. Oliver Velez pointed out there is an eternal conflict of interest between the retail and institutional divisions of major Wall Street brokerage firms. `The retail brokerage arms of most Wall Street firms have historically been money-losing enterprises, but are primarily used as the other side of the transaction for their institutional clients,` he says. `For instance, how does an institutional mutual fund that is a client of a major Wall Street brokerage firm get out of 4.4 million shares of an individual stock in a short period of time? To sell 4.4 million shares close to the desired price in a short period of time, you need a buyer. To help support the buy side is a brokerage upgrade, an analyst recommending the stock to retail investors. Although this action is not illegal, I think if more retail market players were aware of this activity they might be a little more cautious about brokerage upgrades and downgrades. Historically, they have a horrible record.` Of course there are reputable analysts who tell investors the truth about the highly inflated technology stocks, especially the Internet stocks. But there were dozens more who basically took advantage of investor greed by making outrageous price calls based on nothing more than a pie-in-the-sky story and ridiculous valuations. If you looked at the fundamentals of many of these companies, it was quite clear they weren`t going to be making any money anytime soon, if ever. Velez says that you can often use analyst calls to your advantage. If an analyst upgrade comes when it is obvious to everyone that the stock is on a rip-roaring tear to the upside, you can use it as a contrarian signal. Indeed, when Blodgett and Meeker were upgrading Priceline and Amazon, it was the time to sell, not buy. Velez says the same is true in reverse, which more accurately reflects the current market environment. `If a stock drops 70 percent,` Velez says, `and there is a downgrade after a huge decline, that can also be a contrarian indicator. It doesn`t always work out that way, but the individual market player will be far better served by thinking in reverse of brokerage upgrades and downgrades after a stock has already made a substantial move.` Although it might be a bit late for those who got talked into buying many of the Internet stocks at the top, there are many lessons to be learned from the games the analysts are playing. If you are going to trade or invest in the stock market, it is essential you understand how upgrades and downgrades influence a stock, and that you learn the symbiotic relationship analysts have with the companies they are analyzing.` It is rather fascinating to see how we`ve moved from one extreme to another. Recently, analysts have been leap-frogging over each other with stock downgrades of anything that resembles technology, including a poor prognosis for the entire sector. It makes you wonder what the truth is, whether things are as bad as they want you to believe, or if this is another game to allow well-heeled clients to buy stocks at ridiculously low prices, or allow brokerages to add stocks to their inventory at bargain levels. ------------------------------------- grüße Andy p.s. gibt es in letzter Zeit nicht "verdächtig" viele down-grades? |
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| aus der Diskussion: | Börsenguru`s |
| Autor (Datum des Eintrages): | AndyBusch (04.03.01 21:10:12) |
| Beitrag: | 104 von 150 (ID:3028261) |
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