Dreamer got it right in his post #23475:Also, if the individual investor listens to the fund managers to time their entry and exit points, they will be sure to go bankrupt.Typical Tech Case in point: SEBL downgraded by everyone the other day, already well off the highs it established. Permit me to add a few words:First,I think he meant Wall St. analysts working for the various houses (rather than Funds).How is it that there is not a national scandal about the fact that these eminence grises of the major houses were so zealous and bullish on technology at the height of the bubble 1Q/2000, while today, they can muster up the nerve, the absolute chutzpah to say "that stocks are still over-valued by any traditional metric", and "prices are still high...we can expect some more multiple compression" (dontcha just love that term? they don't have the cajones to say in plain English that "prices may fall further". This from people who were arbitrarily inventing metrics on the fly - page views, eyeballs, miles of fiber lit, or laid.Aside: Bullwinkle: "Hey there Rocky, wanna see me pull a ludicrous valuation metric out of my hat"?End of Aside.Perhaps we individual investors had it coming to us, if we were hit out of the ball-park by the worst bear market in a major national stock market since 1973-74. But those who are rewarded so handsomely by the most prestigious houses should surely have know better than us - or should they?The auspicious WSJ said today:"It was a debacle that almost no major brokerage-firm strategist forecast."They have no shame, no remorse, no apology, no sense of wrongdoing. And why should they? After all, they too must make a living.JNPR a buy at 200, excessive P/E at 58.JDSU a buy at 150, excessive P/E at 30.EMC a buy at 80, still excessive at 39....(not to mention being "immune from a tech slowdown")QCOM a buy at $500(pre-4:1 split)AMZN headed for $400, pre-split, now barely a $10 stock.ETYS in bankruptcy proceedingsGo figure.But you know, the populace is waking up. There have been two (2) articles on the Wall St. analysts in the NY Times recently, one as recently as yesterday's front page, the other brilliantly entitled "How could so many have got it so wrong for so long" (author. G. Morgensen). And front page coverage of the recent SEC case in the Sunday magazine (more later).Not to mention a recent 60 Minutes expose on national television, and constant sarcasm on CNBC (no great repository of truth in reporting, either).These jackals have no sense of shame.Walter Piecyk, Paine Webber, now UBS Warburg, are you still employed in the industry, and how much did you make for the firm that day in 12/99 when you predicted QCOM will reach a split adjusted $250 (Dec '99, $1,000, pre-split), and the stock jumped $156, literally, adding to what was already an extraordinary hysteria in that stock?Did I hear something about "fanning the flames"?Sirs, have you no sense of shame?Henry Blodgett and Her Royal Highness, Mary Meeker, Queen of the Internet, which way PCLN, AMZN, ETYS and the rest of them? Where are you hiding now, Madam? How are you each enjoying that $15M annual salary and bonus? Not to mention the delicious irony of Mr. Blodgett's promotion to coverage of MSFT!!Sir and HRH Queen Mary, have you no sense of shame?Wayne Angell and Bear Stearns, how much did the firm make in those recent Friday/Monday rallies, and how can you dare to even show your face in public after that preposterous (double) call over Fed rate cuts, which was so easily taken back after the market had moved as it did? Did the market rise enough for you that Fiday, and the following Monday when you upped the ante from 60% chance to 80% chance of an imminent rate cut, last week?. (Need I add there was no cut, and the call subsequently retracted?)Sirs, have you no sense of shame?Where is Abby Joseph Cohen these days? She is in today's WSJ, saying that she had basically gotten it right with ther tech call of March, 2000 ("Still, she says, she didn't miss the market's problems altogether. In March, she suggested that investors take some money out of stocks in general, and tech stocks in particular")http://interactive.wsj.com/articles/SB983742149288387430.htmHow is it then that no-one listened to Wall St.'s most influential analyst? Perhaps because she didn't get it right, just advocating a slight diminution of Goldmann's tech allocation, and not a bursting of SuperTanker America, as manifested in the strength of our equities markets?Madame, have you no sense of shame?And for all of this, the SEC has persecuted a 15 year old boy in the suburbs of NJ for touting penny stocks on Yahoo or AOL!!! But they never prosecuted him - why might that be? Perhaps because they are more familar than I with what is written above, and would surely lose such a case. This was covered in a recent NY Times Sunday magazine cover story.So what else is there to say? Nothing. As dreamer put in in his post #23475, if investors listen to these people "they will be sure to go bankrupt".We can all lose money on our own, thank you very much. We don't need this additional assistance.wombat
very nice post...I wish we could forward these sentiments (and perhaps we can) to congressman, news agencies, sec officials, or anyone whom we think it may serve a purpose to do so...Sort of like a petition, stating the wish for accountability among those who have influence in the public eye.Just a thought,Dreamer
LOL, nice rant, GP!Aside: Bullwinkle: "Hey there Rocky, wanna see me pull a ludicrous valuation metric out of my hat"?Surely it isn't their fault...it must've been the wrong hat!Johns
SheeshSurely it isn't their fault...it must've been the wrong hatWe due for some serious hat-eating, methinks...wombat
Amen Bat!Here's another little tidbit on Mr. Blodgett.... compliments of the Wall Street Journal... March 2, 2001 All-Star Analyst Faces ArbitrationAfter Internet Picks Hit the SkidsBy Charles Gasparino Staff Reporter of The Wall Street Journal Oh, Henry.A year ago, Merrill Lynch & Co. Internet analyst Henry Blodget was on top of the world, dubbed "King Henry" as the Nasdaq Stock Market and his favorite picks reached new heights.Now, with the Nasdaq mired in a deep bear market, Mr. Blodget is catching guff for steering investors wrong on Internet stocks. In the latest move, a Merrill investor alleged in an arbitration case that Mr. Blodget maintained a "buy" recommendation on an Internet stock to support a financing deal for his firm.Mr. Blodget, 35 years old, declined to comment on the case. "I try at all times to be helpful" to clients, he said in an interview, adding, "The only way to succeed is to create the highest level of integrity and credibility." Merrill says it will fight the claim, calling it "totally without merit."Mr. Blodget is far from the only Internet analyst who got it wrong. Indeed, the case comes as some investors gripe about being misled into buying Internet shares by a broad range of Wall Street firms and their analysts, most of whom had "buy" recommendations on stocks until long after they began sliding. A number of Internet stocks have plunged 90% or more from their highs last year.But it is unusual for an analyst to be taken to task in such a case. "There have been rare instances where an analyst has been named in an arbitration proceeding," said Samantha Rabin, a vice president at Securities Arbitration Commentator, a Maplewood, N.J., research firm. "But as a result of the tremendous media exposure resulting from some of the analysts' recommendations, this could signal the beginning of more to come."In the case, filed with the New York Stock Exchange, Debases Kanjilal, a 46-year-old pediatrician, contends that he bought shares of InfoSpace Inc. in March 2000 through his Merrill broker and maintained the position despite the stock's decline based on Mr. Blodget's "buy" recommendations. Mr. Kanjilal later had a loss of more than $500,000 as the stock crumbled, the claim says.Mr. Kanjilal bought about 4,600 shares of InfoSpace last March at a split-adjusted price between $122 and $133 a share, according to his lawyer, Jacob Zamansky, a New York securities attorney. Mr. Kanjilal's claim, which names Mr. Blodget, Merrill and his broker, says he wanted to sell his InfoSpace shares after they had fallen to about $60 a share in May. But he says he didn't because his broker told him to hold on.He also says in the arbitration filing that his broker, Michael Healy, later told him he had spoken directly to Mr. Blodget and that Mr. Blodget said he continued to be bullish on the stock, with a price target of $100 a share. Merrill says Mr. Healy has no comment, but the company says Mr. Healy never told Mr. Kanjilal he spoke to Mr. Blodget. InfoSpace, of Redmond, Wash., was down nine cents at $3.72 a share Thursday at 4 p.m. in Nasdaq Stock Market trading.Mr. Kanjilal asserts that Mr. Blodget had a reason to provide overly optimistic projections, because they would help Merrill's investment-banking business -- and Mr. Blodget's paycheck. (Analysts' pay increasingly is based in part on the amount of investment-banking business generated by the firm.) Last summer, Merrill had been retained as a financial adviser for another Internet company, Go2Net Inc., which InfoSpace purchased in July for about $4 billion. The acquisition would have been jeopardized, the arbitration case says, if shares of InfoSpace fell before the deal closed."Blodget's recommendations lacked a reasonable basis in fact and Blodget failed to disclose a serious conflict of interest with the company whose stock he was touting," the arbitration filing said.Merrill disputes the assertion, saying Mr. Blodget only learned about the transaction days before the deal was announced, and his next research report on InfoSpace reflected the firm's relationship with Go2Net. Merrill's goal "is to have the highest-quality research for retail and institutional clients," the firm said in a statement, adding that InfoSpace was "branded very risky by the Merrill rating system."Write to Charles Gasparino at email@example.com
They have no shame, no remorse, no apology, no sense of wrongdoing. And why should they? After all, they too must make a living.JNPR a buy at 200, excessive P/E at 58.JDSU a buy at 150, excessive P/E at 30.EMC a buy at 80, still excessive at 39....(not to mention being "immune from a tech slowdown")QCOM a buy at $500(pre-4:1 split)AMZN headed for $400, pre-split, now barely a $10 stock.ETYS in bankruptcy proceedingsNot wanting to prop up a hot air industry, but it is possible for something to be a considered a buy at a 200 and then have excessive P/E at 58. The stock market is forward looking, and (among other things) seeks to attach a present value to future earnings, it follows that
MEA CULPA hit the submit button by mistake:-They have no shame, no remorse, no apology, no sense of wrongdoing. And why should they? After all, they too must make a living.JNPR a buy at 200, excessive P/E at 58.JDSU a buy at 150, excessive P/E at 30.EMC a buy at 80, still excessive at 39....(not to mention being "immune from a tech slowdown")QCOM a buy at $500(pre-4:1 split)AMZN headed for $400, pre-split, now barely a $10 stock.ETYS in bankruptcy proceedingsNot wanting to prop up a hot air industry, but it is possible for something to be a considered a buy at a 200 and then have excessive P/E at 58. The stock market is forward looking, and (among other things) seeks to attach a present value to future earnings. Therefore, it follows that a decreased outlook on earnings growth can radically change what analysts say about the present value of the business.Back when everything was go-go and growth forecasts were heading to the bluest of blue skies it was possible (at a stretch) to extrapolate some of the sky high valuations.Now that expectations are somewhat more earthly, the valuations are radically altered.
Re my posting about Wall St. analysts, and how wrong they all got it (and with how little shame), I believe this same subject will be featured in an article in Friday's WSJ. This is of course the one year anniversary of the all-time high on the NASDAQ, and the bear market in technology stocks in which we now find ourselves.There will also be a feature article on the the subject of "investor rage", or similar theme, by Andy Serwer, in the next issue of FORTUNE magazine.wombat
In my post 23494 of 5 March, I rhetorically asked:Henry Blodgett and Her Royal Highness, Mary Meeker, Queen of the Internet, which way PCLN, AMZN, ETYS and the rest of them? Where are you hiding now, Madam? Well, the Friday WSJ, that protector of the small, the wreteched and downtrodden investor has graciously provided an answer.wombatE-Business Booster Mary MeekerBecomes E-Lusive as Bubble PopsBy RANDALL SMITH and MYLENE MANGALINDAN Staff Reporters of THE WALL STREET JOURNALWhere is Mary Meeker?A year ago, the Morgan Stanley Dean Witter & Co. Internet analyst was basking in adulation. Dubbed the "Queen of the Net" by Barron's magazine in 1998, subject of a glowing profile in the New Yorker in 1999, Ms. Meeker graced the cover of Fortune as the third most powerful woman in business later that year, and addressed the World Economic Forum in Davos, Switzerland, in early 2000.Then the Internet bubble burst. The Nasdaq Stock Market is now down 56% since its peak last March 10 -- and Ms. Meeker has fallen off the radar screen.She hasn't appeared on CNBC-TV since October, when she was taken to task on the business channel for staying too bullish when the Internet stock bubble burst. She was assailed last month by "60 Minutes II" as being overly aggressive in promoting stocks of Morgan Stanley clients, a charge she denies. And she was dethroned as the top Internet analyst in a widely watched Institutional Investor magazine poll.In an interview, Ms. Meeker says she never aspired to become a media star, and in fact worried publicly about becoming a "poster child" for dot-com market mania. "I did not aspire to be a media celebrity in any way, shape or form. I felt uncomfortable being in the limelight," she says, disputing speculation that she has been under pressure at the firm to lay low.Ms. Meeker is far from the only Internet analyst to have gotten it wrong last year. But she has been among the most powerful, partly because her firm has been a top underwriter of Internet stocks.Ms. Meeker, 41 years old, acknowledges some regret over the "especially disappointing" fate of some of the initial public offerings which Morgan Stanley led and she recommended at the height of the frenzy. In an interview, she cites Ask Jeeves Inc., drugstore.com Inc., Priceline.com Inc., Women.com Networks Inc. and HomeGrocer.com. Those stocks had all fallen by 67% to 96% as of late last month, according to Morgan Stanley's own calculations.Some of Internet analyst Mary Meeker's comments over the last two years. 1. April 1999 "There is no doubt in my mind that the aggregate market value for the Internet sector will be a lot higher in three years than it is today."2. January 27, 2000 "Priceline.com has four million customers, a great brand name ... We believe that as Priceline.com adds more product lines it will also add more customers and more revenue, higher margins, and improving financial results."3. April 19, 2000 "We hate that falling knife, but in our opinion there are some compelling Internet stock values out there -- perhaps we haven't seen a bottom yet, but, for the leaders, we certainly should be closer to a bottom than to a top."4. January 24, 2001 "We love the idea that there appears to be a universal perception that Internet-related investing is dead, as we believe it gives us the opportunity to be 'crazy like foxes' and come up with what should be some good money making ideas in 2001." But she remains resolutely bullish on the online sector, saying its drubbing could represent a huge buying opportunity for selected leaders. And she says the stock-market value that was vaporized among her picks in the dot-com crash is far outweighed by the value created by stocks she has recommended over more than a decade, including Microsoft Corp., America Online, Compaq Computer Corp. and Dell Computer Corp."I had a bad year. I would hate to be judged on one bad year," she says in a corner conference room at Morgan Stanley's headquarters in midtown Manhattan. Although she concedes she "stayed too long on some stocks," she did raise plenty of yellow flags amid the dot-com mania. For example, in a March 2000 Webcast to retail clients, she said 90% of "net" stocks were overvalued and 10% were undervalued. And she says she wasn't seduced by the fat fees she and her firm stood to earn on the deals she helped push.Morgan Stanley took in $479.6 million in fees for Internet IPOs and follow-on offerings in 1998-2000, according to Thomson Financial Securities Data. But Ms. Meeker argues that the fees Morgan received on Internet deals needn't necessarily have posed a conflict to her analytical objectivity, because investment bankers make more money by taking successful companies public. "The bigger they get," she explains, "the more [investment-banking] services they will need."Ms. Meeker declines to discuss published reports that she received a $15 million pay package in 1999 and widespread speculation on Wall Street that her 2000 pay slipped.She says the entire Internet sector was engulfed by a series of forces that couldn't have been anticipated, including a slowing economy, uncertainty over the presidential election, the increases in interest rates engineered by the Federal Reserve, and cautionary notes about the economy sounded by President-elect Bush as he campaigned for a tax cut.What is more, she argues, Morgan Stanley was more selective in the Internet IPOs of stock that it chose to underwrite than some competitors. Indeed, her firm's IPOs generally performed better than those led by major competitors including Goldman Sachs Group Inc. and the Credit Suisse First Boston unit of Credit Suisse Group.Ms. Meeker says bankers and analysts at the firm misjudged the size of the market opportunity for Women.com after the early success of an IPO of iVillage.com Inc., another Web site for women. They thought Priceline's model would work longer than it did. And they and the management team misjudged the costs at AskJeeves."There were unique forces at work that we will never see again in our lifetime," she says -- among them the mushrooming of financing volume by Internet companies world-wide, which exploded from $4.1 billion in 1998 to $47.9 billion in 1999 and $35.2 billion in the first quarter of 2000. At that point, she said, "the market for 'new paper' for 'new ideas' was saturated in March 2000."Ms. Meeker says she and other bullish Internet analysts -- such as Henry Blodget of Merrill Lynch & Co., who took her place as the top Internet analyst in the latest Institutional Investor poll -- are "all being judged on a period that was an anomaly." In hindsight, she says, "whenever you have a gold-rush mentality that's created, and the music stops, it's not pleasant. It's unfortunate."However, she adds, Internet usage is still growing, and "this will be viewed as one of the most dynamic periods of innovation in the history of the world. The fact that there is more sanity in the market is good. Just when people think it's over is the time it starts up all over again."It is a message she has been stressing to investors. In a report earlier this year, she said: "Given the performance of tech stocks in general and Internet-related stocks in particular over the last year, the market seems to be saying that 'the Internet is dead,' and many prognosticators seem to be insisting that 'Internet investing was crazy, anyway.' " That view may present "some good money-making ideas in 2001."Despite the Internet slowdown, Ms. Meeker says she hasn't cut back her workaholic schedule. On Tuesday, she stayed at the office until 12:30 a.m. writing a new report. However, she says she doesn't get approached daily in elevators and taxicabs, the way she used to, by strangers proffering Internet business plans.She also suggests that one reason she hesitated to downgrade many of the stocks she covered was concern about possible adverse market fallout. At one point in November, questions she raised about whether Yahoo! Inc. would meet revenue targets triggered a 15% downdraft in the stock.Yet some rivals contend that the number of Morgan Stanley clients clamoring for Ms. Meeker's name on their research reports left her stretched thin. As of last November, she was listed as one of the analysts on 22 different companies. Among Morgan Stanley IPOs touted in reports with her name on them: Artistdirect Inc., AskJeeves and Tickets.com. All are down more than 85% since their IPOs. (Morgan Stanley says Ms. Meeker covers just 14 companies as the lead analyst.)Ms. Meeker, a former desktop-computer analyst, did pioneering research on the Internet dating back to the IPO of Netscape Communications Corp. in 1995 -- well ahead of her chief competitor, Mr. Blodget, who came to prominence as an analyst in late 1998 with a super-bullish call on Amazon.com Inc.But some money managers say the amount of Ms. Meeker's investment-banking work these days undercuts her credibility. (At one point just over a year ago, Ms. Meeker addressed the board of Time Warner, a Morgan Stanley client, on the advisability of buying AOL, one of her earliest Internet stock picks dating back to December 1993.)"She became more of a celebrity spokesperson, doing banking deals and all that. I haven't paid attention to her or talked to her or even looked at any of her research in three to four years," says Gary Dvorchak, a money manager at Provident Investment Counsel in Pasadena, Calif.Questions about how much analysts in general, not Ms. Meeker in particular, are influenced by investment-banking fees were raised just last week by a senior market strategist at her very own firm, Byron Wien. In a Feb. 27 report titled "The Issue of Integrity," Mr. Wien said analysts shouldn't "gloss over a negative change in the fundamentals of a company" due to concerns about investment-banking relationships."Investment bankers may believe they will have better relationships with their clients if analysts say nice things about the companies they cover," he said in the report. "But they must realize opinions have little value if the person delivering them has no credibility. Analysts must honestly and openly express their views or their franchises will erode and they will ultimately be of no use to investors or bankers." (Mr. Wien said Ms. Meeker called to compliment him on the report.)Some rival investment bankers are sympathetic to the plight of both Ms. Meeker and Mr. Blodget. "If you're covering the cruise-ship industry and the Titanic happens, what are you going to say?" says one. "Were there examples where her recommendations overstayed the viability of the business model? Undoubtedly. She is no different from anybody else on that subject," says Storm Boswick, a tech-stock investor at J&W Seligman Co.Besides, some institutional investors say, they don't focus on analysts' ratings as much as the content of their reports. "I can't imagine any professional fund manager picking up a research report and saying, 'Oh, they went from a hold to a buy. We should load up,'" says William Gurley, a partner at Benchmark Capital, a venture-capital firm.Ms. Meeker, for her part, doesn't shed many tears over the impact of dot-com carnage on the individual investors who might have been more susceptible than professionals to following her calls. Her "constituency," she notes, is more the institutional clients and mutual-fund managers who invest on individuals' behalf.She shouldn't be blamed, she says, if individuals enraptured by the average annual gains of 42% on the Nasdaq between 1995 and 1999 put too much of their money in high-risk Internet stocks. "Every individual has got to be accountable for how they're allocating their investments," she says.As Ms. Meeker takes a lower profile, some say other analysts at Morgan Stanley are getting more of the spotlight. Her colleague, Charles Phillips, who follows software companies, appears to have become more prominent lately, says Caryn Marooney, who runs public-relations firm Outcast Communications in San Francisco."The man is Chuck Phillips. His name is coming up much more as the analyst," Ms. Marooney says. As for Ms. Meeker? "We seem to hear her name less."
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