Poll: Wall St. Research Panned
When asked about analysts' stock picking ability, a full 59 percent of respondents checked "We'd be better off with monkeys throwing darts."
Not surprisingly, 53 percent of respondents also say that Wall Street research is "largely mediocre," while a further 27 percent go further and say it's "terrible" and has "led the entire industry astray."
Blame seems to fall on conflicted interests: A full 88 percent of the first 76 respondents say there should be a legal separation between analysts and other divisions in the investment banks they often work for.
What's more, 87 percent think there should be no link between analyst pay and banking or brokerage fees. And 67 percent think the fact that Wall Street analysts often work for investment banks "makes all of their opinions worthless."
The multimillion-dollar payments made to top analysts during the bubble years are viewed as "outrageous" by 55 percent of respondents. Only 3 percent consider this "totally in reason."
The results aren't surprising. The industry downturn has focused attention on Wall Street analysts and their role in the hypefest that preceded the fall (see Cool Hand Vik and Jack Grubman Goes).
To take the poll and view the latest results, click here.
— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com
I would observe what Wall Street analysts do is:
1. Carry out their jobs, as defined [there are different definitions among different Wall Street firms, bulge bracket and boutique; and, there is a reason they are called "sell-side" analysts - do the math.]
2. Conflicts of interest or the appearance of conflicts often exist.
3. They sometimes cross lines -- or venture too far into gray areas -- to increase their income [see "greed," above].
4. All of us do 1, 2, and 3 to some extent.
For example: I try to meet my sales quota; I sometimes promise a customer something we don't have yet in their area (e.g., dual-homing), and work hard with other staff to make it happen as soon as possible; and will go to restaurants which competitors' staff frequent and try to eavesdrop on their conversations (expecially about customers that are complaining about service, pricing, etc.) Maybe it's just me and all those analysts that have issues.
As for surveys, my own unscientific survey on Light Reading revealed that 100% of respondents believe Light Reading staff are under-payed and over-influenced [be advised of my use of a general term -- "over-influenced" -- here, as LR did in its article] by the sales (advertising) side of Light Reading, for whom they typically {or ostensibly, anyway) work.
When asked about Light Reading's top ten list picking ability, a full 50% of respondents said "We'd be better off with darts throwing monkeys."
In Light Reading's favor, 75% of respondents said Light Readings research is "excellent," and the fourth respondent {not me), despite family problems, said it was "very good" anyway.
Credit seems to based on Light Reading's extensive contacts throughout the industry. A full 100% of the first (and only) four respondents said "I wish I had *their* Rolodexes," in some cases preceded by and/or sprinkled with expletives, which I had the sensitivity to delete.
What's more [ed. note: the opposite of "less"], 100% think there should be a link between Light Reading staffer's pay and its owners' whims.
The multi-thousand dollar payments made to top LR staffers during the bubble years are viewed as "appropriate" by 3 of 4 respondents. I think they should have gotten more money.
The results of my unscientific survey aren't surprising. The other three respondents think like me; they even like the same brand of beer. The survey upturn has focused attention on surveys and their role in the surveyfest that is preceding the Fall (that is, occuring during this Summer).
To take my poll, just add your thoughts on Article Talk. I will tabulate the results as soon as I can. Employees of Light Reading, their families and friends, and those of Publishers' Clearinghouse cannot take the survey or win any prizes. No one else win prizes, since there are none.
OFM