UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next
Author: yobria Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76079  
Subject: Re: Why Index Funds Date: 2/17/2004 11:38 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Paul,

Interesting stuff. I'm not sure this is a point for index funds, but it's certainly a point against analyst recommendations.

I was reading an interview recently with a Schwab manager trying to explain away the fact that their "F" rated stocks had outperformed their "A" list last year. His excuse was, "No matter how our A stocks performed you should still own them since they're safer investments."

What he didn't get was that efficient markets price this stuff in, so the investor gets stocks with worse fundaments at a discount. (Schwab rates companies based on fundamentals)

Investment banks rate stocks mainly to induce institutional clients to do banking or trading with them. They aren't paid by, and few even track, subsequent performance.

WEB has a great quote, something like: "When you see an analyst rating, do one thing- laugh!"

Nick
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Berkshire Hathaway

IBM: Is Buffett Wrong, or Brilliant?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement