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I might argue that financial analysts are too focused on their models and this quarter's numbers but most of the better ones are actually pretty savvy about the
by ghaff 2y ago
I might argue that financial analysts are too focused on their models and this quarter's numbers but most of the better ones are actually pretty savvy about the trends and other happenings in the industry that they follow. They're as susceptible to the hype du jour as most people are but they're not actually stupid for the most part.
- graemep 2y agoYes, but remember there are multiple layers to that. I have worked as a buy side analyst in a small team (in my former career) and did much less detailed modelling. There is an incentive structure that pushes fund managers to look at their rankings this year: there is no point in aiming at outperforming over a decade if you got fired two years in for underperforming. It has happened to people who have not bought into booms. I actually think avoiding the "hype de jour" is one place where small investors have a chance to do well. Avoid the overhyped, pick up the neglected and you can outperform.
- ghaff 2y agoNo argument. Incentives matter. There's one company I looked at for a modest investment and I was like "This is the only company in the world that can do something that is obviously needed in semiconductors but has long cycles" and it stagnated for a year or two. (And then went up considerably.) As a financial analyst I might very well have logically held off for a bit.