Chapter
The Problem with Analyst Ratings and Stock Performance
48:44 - 53:27 (04:42)
Analyst estimates and ratings that are based on industry narratives often do not have a strong relationship with stock performance over the next year, as the stock market as a whole can impact a stock's price more significantly.
Clips
The biggest economic risk always lies in what we don't see or know.
48:44 - 49:53 (01:08)
Summary
The biggest economic risk always lies in what we don't see or know. Richard Shotton's article exemplifies this through the finding that stocks with high proportion of sell ratings generated higher returns than those with buy ratings, which is a form of classic contrarianism.
ChapterThe Problem with Analyst Ratings and Stock Performance
Episode#142 - Morgan Housel - How To Create & Manage Your Personal Wealth
PodcastModern Wisdom
Narratives that are comfortable and conventional for analysts to form don't necessarily drive stock prices over time.
49:53 - 52:18 (02:24)
Summary
Narratives that are comfortable and conventional for analysts to form don't necessarily drive stock prices over time. Therefore, there is a lack of correlation between analyst estimates based on these narratives and stock performance.
ChapterThe Problem with Analyst Ratings and Stock Performance
Episode#142 - Morgan Housel - How To Create & Manage Your Personal Wealth
PodcastModern Wisdom
Investors play different games and therefore, not all information is equally relevant to everyone.
52:18 - 53:27 (01:09)
Summary
Investors play different games and therefore, not all information is equally relevant to everyone. It is important to figure out what is personally relevant and not pay attention to irrelevant noise.