RE:Our man MarnerMS:
Thanks for the kinds words, but the reality is it that I probably couldn't get a job sweeping floors on Bay St at this stage of my life.
I left that world a long time ago because it wasn't for me.
I often use the expression "follow the money" in my posts. I learned that while serving time on Bay St. because it is all about the money. Bay St. and the market in general is a place where no transgression remains uncrossed if the payout is big enough and a slight degree of denial can be maintained, or a finger can be pointed somewhere else if things go wrong.
The analysts that everyone here like to craap on are typically intelligent and disciplined people who have had all had the basic training before they get hired. They are provided with the best tools and they have access to corporate information that borders on, and often crosses, insider information at their disposal. In fact, the trick to becoming a great analyst is figure out who to ask the right questions to in the right way. Everyone knows where the lines are and that they are not to be crossed, so it becomes incumbent upon the analyst to ask questions in such a way that they can be answered without crossing the line.
A perfect example of what I'm talking about in regards to getting the information that you want without crossing the line can be seen in the latest Q&A from the Suncor managment discussion. After one particular question where the analyst says "I know you can't tell me the answer but...." and the corporate executor responds "you know I can't tell you the answer....but....".
Analysts tell us what the share price should be based upon their models. Unsurprisingly, the models for most of the analysts are not much different from each other. That is why their targets are so similar. The outlier targets that you see typically originate from a mistake, or on the rare occassion for exceptional insight or insider information. Analysts don't have the time to come up with exceptional insights and they can get fired if they are wrong. Therefore, there is safety in the herd mentality. The fact that fund managers who get their information from analysts that don't take chances means that the performance from fund managers (who also don't want to take chances) rarely stray far from the mean.
The reason that I'm posting this information is to encourage readers to learn about the market and focus on specific stox. The more you learn, the luckier you will get.
You don't have to be a Bay St. analyst to become knowledgable about individual stox. In fact, all the information that you will ever need to understand a public company is available online.
Even if you don't have strong financial reporting skills, all you really have to do is read the management discussions accompanying the financial reports. There is very little room these days for corporate managers to wiggle when it comes to disclosure. The only real decision imo (which fantome has spoken of often) is to learn whether management is good at their jobs and if they can be trusted.
It is important to understand that any given analyst is likely to have a deep understanding of about a maximum of five companies. For all of the rest of the companies in "their industry", that they are seen as the firm's "go to" guy, they probably don't have any more knowledge that you or I can glean from what is out their for public consumption.
The main things that I have learned over the years is to do your homework and be very careful and selective about who you trust. And for goodness sake, understand that the media is easily manipulated and all about headlines and sound bites. The media is rarely if ever well informed.
I guess what I'm trying to say is that if you love the market, take the time to learn the basics and then focus on a few specific target companies and trust your instincts. And, last but not least, don't get too full of yourself if you have some success because the market has a way of humbling us all.