Using Broker Research

[macduffy]

Here's a useful article from The Age on the limitations of broker research - and how to get the most benefit out of it.

http://www.theage.com.au/money/investing/how-to-make-the-most-of-broker-research-20140911-10fhoi.html

[winner69]

Good one macduffy

Best bit

DON'T use broker research for Valuations (they're implausibly precise)


Does seem many on this forum do believe them though

[Sideshow Bob]

In NZ, I've wondered if sometimes they become a self-fulfilling prophecy. If one of the larger brokers name their 'stock du jour' as a buy, they put enough of their clients and move the market? Albeit on a short term basis.

[noodles]

Sure ignore the recommendation, but don't ignore the earnings estimates. Brokers beats or misses are catalyst for share re-ratings.

I also follow fnarena. The bloke that runs it has created something call an Icarus Signal. Now I don't trade it, but he certainly thinks it is valuable data. He would argue that broker targets DO affect prices.

http://au.ibtimes.com/articles/148237/20110519/fnarena-launches-unique-research-tool-the-icarus-signal.htm

[youngatheart]

Hope this hurries up and gets here... Broker Disruptor (http://www.gizmag.com/robinhood-zero-commission-stock-trading-app/33963/)

[Hoop]

As far as I'm concerned, the only purpose they are fit for is wiping your ass. The day they come out with a sell recommendation for a stock that is at its peak, rather than after its fallen 50% - then maybe I'll change my mind. Otherwise, all they are doing is facilitating the "buy high, sell low" problem for retail investors.

I reinforce KW's post with a 2 year old FBU chart when I did a study on Macquaries price targets..Actually brokers in general have this similar lag problem thereby creating an illusion that down trending shares are "cheap" and cyclic reversals and up trending shares are "too expensive..

The FBU posts where brokers price target came into question were around October 2012 when the topic came up that FBU was looking overbought (http://www.sharetrader.co.nz/showthread.php?5170-FBU-Chart/page70)and too expensive when it was rallying through the $6's to $7...TA had you in and buying..The charts showed an end to the bear cycle and signaled a long term buy...Brokers figures had FBU as overpriced and had you selling...

http://i458.photobucket.com/albums/qq306/Hoop_1/FBU10102012-1.png (http://s458.photobucket.com/user/Hoop_1/media/FBU10102012-1.png.html)

[winner69]

Current targets for FBU are 825 to 1080 with a median of 970

One of 9 analysts probably spot on ....which one?

The 835 maybe .....a continuation of the current trend

[Hoop]

Current targets for FBU are 825 to 1080 with a median of 970

One of 9 analysts probably spot on ....which one?

The 835 maybe .....a continuation of the current trend

Ahhh what happens if the current trend breaks..Then the answer could be none of the above..Decisions Decisions..and uncertainty..eh?

Now a Chartist life is quick and easy...Brokers & Crystal Ball Gazers who cares....Its all to do with squiggly lines and the compass..going North is good :D, going south is bad :p... at the moment FBU is going sideways :mellow:...

[skid]

Which is East--Unfortunately for some ,they can never go West:)

[Hoop]

Which is East--Unfortunately for some ,they can never go West:)

Feltex after going South went West ;)