4 ms·

> Sometimes one firm called a security junk and another gave a triple-A rating deeming it supersafe. Doesn't this suggest that the ratings are providing close

• lonelappde 7y ago
  It depends on each agency's historical performance (maybe only one is bad) and how often this discrepancy happens. Ratings are probabilities to be evaluated statistically.
• deleted 7y ago
  [deleted]
• patio11 7y ago
  Insufficient information to judge that to be the case; they rate millions of bonds and, statistically, they’ll almost certainly have every type of disagreement occasionally. The difference between AAA and junk isn’t 99 and 3 on a 100 point scale; it is somewhere in the neighborhood of 99.9 and 96.0 on the 100 point scale “Likelihood to not default within 1 year.” You’d need vastly more data points to firmly believe the conclusion “Their ratings are indistinguishable from being randomly generated.” There are people on Wall Street who can appreciate this math. A statement which is true and necessary but may not be kind: Wall Street does not allocate their talents towards producing journalism.
• imtringued 7y ago
  As you ask more rating agencies the rating becomes more accurate. If you already know the correct rating and then intentionally pick a rating agency that would give a different score then yes it would provide zero signal.