No. of Recommendations: 0
Hey gordo,

No need to ask me twice, gordo, I'm happy to read opinions that differ from my own, especially when they are as well-argued and thoughtful as yours! The feedback is much appreciated, and dialogue is keenly encouraged, here at the Fool.

I understand where you're coming from on Merrill. They've got clients that they feel they need to take care of, so they try to warn them of impending dangers on the Street. Nothing wrong with that.

But there are several problems with their method, in my opinion. First, while Merrill has been around the market a long time and has a good sense of it, they still have not proven their ability to call short-term problems in the market. The short-term downgrade of Amgen in August, despite the Nasdaq's meteoric rise, was simply bad advice. Had they put a "Strong Buy" on QQQs at the same time, maybe. But shying your investors away from a stock that goes up 40+% in 9 months is not good advice.

Which brings us to the bigger problem. Even if they could call the market in the short term, Merrill is not serving its long-term clients well by advising based on the market conditions of the day. If I'm looking today for a stock to purchase for the long term, I won't find Amgen on Merrill's "Strong Buy" list.

Why? Not necessarily because they think it will not outperform the market for the next 3-5+ years, but because, according to the research comment, "Amgen's stock is likely to be extremely volatile over the next few months until Judge Young hands down his ruling." That has nothing to do with the fundamentals of the business. It ignores the long-term prospects of the company in favor of short-term uncertainty.

If I'm investing for 5 years, I need a longer outlook than that. I need advice that tells me what will drive a company after the current market conditions change, as they most certainly will. Merrill would help me a lot more if they could look past the current situation and focus on long-term value.

Merril announces. "Hold it if you got it. Get some more if you believe in the position. If you don't own it already, I've got some better horizon's to start you in."

Yes, I think that is what Merrill is saying. That's the problem. They're pointing me to companies who look rosy RIGHT NOW. That's not what I need. Those companies will probably hit rocks soon enough.

Much better would it be to tell me, Joe Long-Term, "Hey, Amgen's falling because of some uncertainty about this trial. Since their pipeline is so strong, and their R&D is unparalelled, now's the time to get in."

Assuming that that's what they think, anyway. :) Trouble is, I can't find out what they think about long-term prospects from reading their long-term downgrade report.

Hence my rant. :)

I don't mean to bad-mouth Merrill in particular, by the way. They've got a number of first-rate analysts. I find their research very useful, so long as I look past their conclusions. It's just that they, and other analysts, would serve their clients better by coming to better, long-term conclusions based on their research.

Just one Fool's investment opinion!

Fool on!
BrianZ

Print the post  

Announcements

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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.