Here’s another interesting news item that slipped in under the radar: The Sell Side Still Says ‘Buy’.
As the accompanying table (courtesy of Barron’s) makes clear, fundamental Analysts have become somewhat less inclined to say “Sell.” Analysts gave “Sell” or “Strong Sell” ratings to only 9.4% of stocks in March 2004, compared to 10.3% a year earlier.
I’m the last person to defend my Fundie brethren; However, the time to cry “Sell” would not be at an early phase of what many believe (but not me) to be a multi-year expansion. Indeed, it would be silly to have a lot of sells in the midst of a powerful rally.
So what we really are complaining about here is this: People who’s job it is to analyze individual companies within a narrow sector do not have a good ability to determine when the economy’s overall expansion (or contraction) begins to end and subsequently reverse. Phrased differently, these folks cannot tell the difference between a mere Market Rally and a more enduring Bull Market. (Not that its really their jobs to tell)
Of course, there must be some stocks worthy of the “Sell” rating — but more than 1 out of 10? I dunno . . .
Wall Street Bulls Ahead
|As of March 1, 2003||As of March 1, 2004|
|# of Recs||% of Total||# of Recs||% of Total|
Source: Thomson First Call
The Sell Side Still Says ‘Buy’
Barron’s Weekday Trader, April 8, 2004