5 ms·

I love this talk of "analysts". Did the "analysts" miss that Google just bought a struggling 10B+ Motorola? Do they expect it to be some magic unicorn that can

I love this talk of "analysts". Did the "analysts" miss that Google just bought a struggling 10B+ Motorola? Do they expect it to be some magic unicorn that can turn Motorolas losses into Googles profits in a single quarter?

smackfu 14y ago
Here are the analyst numbers in a bit more detail: http://finance.yahoo.com/q/ae?s=GOOG+Analyst+Estimates http://finance.yahoo.com/q/ae?s=GOOG+Analyst+Estimates 38 separate analysts, high estimate was $13, low estimate was $9.92. Average was $10.65, actual numbers were $9.03, so below even the most pessimistic analyst. That usually means the publicly available info just wasn't accurate, that something happened privately that only Google knew about. Usually companies avoid this kind of thing by giving some mid-quarter update so that they can mitigate some of the damage. Google actually provides no EPS guidance at all though, which also caused problems with a big miss in January 2012. Analysts like to have something to work off of.
- rm999 14y ago
  Analyst earning forecasts are known to be optimistically biased. Here's a paper discussing this: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971027 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971027
  - smackfu 14y ago
    Which should theoretically let you "put your money where your mouth is", since if analysts are systematically wrong, and the prices move in response to analysts...
    - jamesaguilar 14y ago
      I think you'd have to test the latter assumption too before you go betting against them.
    - rm999 14y ago
      Although I think most serious investors either ignore analysts or know to adjust for their biases. Some of the real victims are lazy academics, as the paper discusses.
  - jivatmanx 14y ago
    I wonder if this is a variation of the analyst theme of never, ever give a stock a sell rating?
jusben1369 14y ago
Sometimes I sense a lot of derision from some folks towards "analysts" on these posts. A good analyst has a lot of public data and history to go along with their own sleuthing and detecting (talking to larger customers, suppliers, partners etc) where they should arrive at good estimates. Lord knows they get paid pretty well to be good at it. So if this was the cause of the big shortfall and all the analysts missed it then it is a poor job they're doing. I just don't think we should deride analysts and or let them off the hook based on the idea that there isn't a discipline here that can be followed.
- qdog 14y ago
  Something like 9/10 funds under perform the market as a whole, right? Analysts are almost all liars marketing themselves, I don't think they need a 'break'. There's a lot of derision because the profession of stock analyst is about equal to Snake Oil Salesman.
  - joezydeco 14y ago
    What's worse is that the phrase "missed analyst expectations" is common in the media yet nobody questions what that really means anymore. It's just generally perceived to be an instant negative.
    - tatsuke95 14y ago
      >It's just generally perceived to be an instant negative. It's an aggregated consensus of short term future earnings best guesses. It is assumed that these expectations are "priced in" to the stocks's price. When a company releases earnings and "misses", there is an adjustment to the share price.
  - jusben1369 14y ago
    I think you just catalogued the definition of the bias that exists here as being based upon sweeping generalizations and ignorance: "Something like 9/10 funds under perform the market as a whole, right?" - What does that mean? That 9 out of 10 mutual funds return less than the average improvement in the Dow? That means that 9 out of 10 funds would be weighting in the bottom 50% of all stocks? "Analysts are almost all liars marketing themselves, I don't think they need a 'break'." - When has it ever worked out for someone to say "All or nearly all people are X" when you're talking about a large group? It reflects very poorly on the author whenever they make sweeping generalizations like this. "the profession of stock analyst is about equal to Snake Oil Salesman" - Which is really just a step above name calling in the schoolyard. And a stock analyst is very different from a fund analyst but I doubt that really matters to you. I have often suspected that one of the things that drives PG was this generalization that programmers by their very nature don't understand how business works and therefore don't need a seat at the business table. It's always better to be breaking down stereotypes rather than playing into them.
jmduke 14y ago
This meme of 'anyone who is not a programmer is an idiot' has to stop. This is incredibly frustrating and severely undermines the level of discourse.
- EmergencyKnave 14y ago
  That's not what he said.
- jjtheblunt 14y ago
  I believe the meme is "What _is_ a Wall Street analyst, and why are such considered credible?".
- jamesaguilar 14y ago
  He seems to be saying, "people with idiotic beliefs are idiots." Nowhere in there are programmers mentioned or is any comparison to them made.
  - jarcoal 14y ago
    That's not really what he said at all. He made the assumption that these analysts didn't do their job well, and that he in fact knows more about Google's financials/operations than they do. The "programmer" remark jmduke made is just an assumption based on the fact that nearly everyone that uses this site is a programmer of some kind.
    - Dylan16807 14y ago
      That's still quite a leap when programmers are notoriously bad at predicting time scales. But prediction isn't the programmer's job.
- jamesmcn 14y ago
  Nice try, analyst.
- zmj 14y ago
  Most people are bad at making predictions. This is particularly true when they have incentives other than accuracy. Programmers are not immune to that failure mode, but programming culture encourages data-driven decision-making and prizes empirical results.
ecliptic 14y ago
What Google makes per ad click is down 15% year over year and 3% for the quarter. No unicorn needed.
incision 14y ago
Prediction is difficult, especially if it's about the future. There will probably be at least a few analyses published in the next few days claiming this miss was "obvious" for various reason, all with the equal benefit of hindsight. If you can consistently identify things which analysts and those who follow them are prone to overlook or fail to comprehend, there's all kinds of money to be made. Personally, I've had some great successes putting money behind my own predictions.
prostoalex 14y ago
Some missed, and some didn't. Good thing you had the prescience to foresee this. Care to disclose your position and total profit raked in on betting against those analysts? Stock market opinions are kinda cheap otherwise.
tatsuke95 14y ago
No, they account for such things, and did, and despite that, Google "missed" the estimated earnings. There is no bigger industry on the planet than the financial industry. That means a ton of money flowing around. There is far more sophistication there than you give it credit for.

smackfu 14y ago

Here are the analyst numbers in a bit more detail: http://finance.yahoo.com/q/ae?s=GOOG+Analyst+Estimates http://finance.yahoo.com/q/ae?s=GOOG+Analyst+Estimates 38 separate analysts, high estimate was $13, low estimate was $9.92. Average was $10.65, actual numbers were $9.03, so below even the most pessimistic analyst. That usually means the publicly available info just wasn't accurate, that something happened privately that only Google knew about. Usually companies avoid this kind of thing by giving some mid-quarter update so that they can mitigate some of the damage. Google actually provides no EPS guidance at all though, which also caused problems with a big miss in January 2012. Analysts like to have something to work off of.

rm999 14y ago
Analyst earning forecasts are known to be optimistically biased. Here's a paper discussing this: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971027 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971027
- smackfu 14y ago
  Which should theoretically let you "put your money where your mouth is", since if analysts are systematically wrong, and the prices move in response to analysts...
  - jamesaguilar 14y ago
    I think you'd have to test the latter assumption too before you go betting against them.
  - rm999 14y ago
    Although I think most serious investors either ignore analysts or know to adjust for their biases. Some of the real victims are lazy academics, as the paper discusses.
- jivatmanx 14y ago
  I wonder if this is a variation of the analyst theme of never, ever give a stock a sell rating?

jusben1369 14y ago

Sometimes I sense a lot of derision from some folks towards "analysts" on these posts. A good analyst has a lot of public data and history to go along with their own sleuthing and detecting (talking to larger customers, suppliers, partners etc) where they should arrive at good estimates. Lord knows they get paid pretty well to be good at it. So if this was the cause of the big shortfall and all the analysts missed it then it is a poor job they're doing. I just don't think we should deride analysts and or let them off the hook based on the idea that there isn't a discipline here that can be followed.

qdog 14y ago
Something like 9/10 funds under perform the market as a whole, right? Analysts are almost all liars marketing themselves, I don't think they need a 'break'. There's a lot of derision because the profession of stock analyst is about equal to Snake Oil Salesman.
- joezydeco 14y ago
  What's worse is that the phrase "missed analyst expectations" is common in the media yet nobody questions what that really means anymore. It's just generally perceived to be an instant negative.
  - tatsuke95 14y ago
    >It's just generally perceived to be an instant negative. It's an aggregated consensus of short term future earnings best guesses. It is assumed that these expectations are "priced in" to the stocks's price. When a company releases earnings and "misses", there is an adjustment to the share price.
- jusben1369 14y ago
  I think you just catalogued the definition of the bias that exists here as being based upon sweeping generalizations and ignorance: "Something like 9/10 funds under perform the market as a whole, right?" - What does that mean? That 9 out of 10 mutual funds return less than the average improvement in the Dow? That means that 9 out of 10 funds would be weighting in the bottom 50% of all stocks? "Analysts are almost all liars marketing themselves, I don't think they need a 'break'." - When has it ever worked out for someone to say "All or nearly all people are X" when you're talking about a large group? It reflects very poorly on the author whenever they make sweeping generalizations like this. "the profession of stock analyst is about equal to Snake Oil Salesman" - Which is really just a step above name calling in the schoolyard. And a stock analyst is very different from a fund analyst but I doubt that really matters to you. I have often suspected that one of the things that drives PG was this generalization that programmers by their very nature don't understand how business works and therefore don't need a seat at the business table. It's always better to be breaking down stereotypes rather than playing into them.

jmduke 14y ago

This meme of 'anyone who is not a programmer is an idiot' has to stop. This is incredibly frustrating and severely undermines the level of discourse.

EmergencyKnave 14y ago
That's not what he said.
jjtheblunt 14y ago
I believe the meme is "What _is_ a Wall Street analyst, and why are such considered credible?".
jamesaguilar 14y ago
He seems to be saying, "people with idiotic beliefs are idiots." Nowhere in there are programmers mentioned or is any comparison to them made.
- jarcoal 14y ago
  That's not really what he said at all. He made the assumption that these analysts didn't do their job well, and that he in fact knows more about Google's financials/operations than they do. The "programmer" remark jmduke made is just an assumption based on the fact that nearly everyone that uses this site is a programmer of some kind.
  - Dylan16807 14y ago
    That's still quite a leap when programmers are notoriously bad at predicting time scales. But prediction isn't the programmer's job.
jamesmcn 14y ago
Nice try, analyst.
zmj 14y ago
Most people are bad at making predictions. This is particularly true when they have incentives other than accuracy. Programmers are not immune to that failure mode, but programming culture encourages data-driven decision-making and prizes empirical results.

ecliptic 14y ago

What Google makes per ad click is down 15% year over year and 3% for the quarter. No unicorn needed.

incision 14y ago

Prediction is difficult, especially if it's about the future. There will probably be at least a few analyses published in the next few days claiming this miss was "obvious" for various reason, all with the equal benefit of hindsight. If you can consistently identify things which analysts and those who follow them are prone to overlook or fail to comprehend, there's all kinds of money to be made. Personally, I've had some great successes putting money behind my own predictions.

prostoalex 14y ago

Some missed, and some didn't. Good thing you had the prescience to foresee this. Care to disclose your position and total profit raked in on betting against those analysts? Stock market opinions are kinda cheap otherwise.

tatsuke95 14y ago

No, they account for such things, and did, and despite that, Google "missed" the estimated earnings. There is no bigger industry on the planet than the financial industry. That means a ton of money flowing around. There is far more sophistication there than you give it credit for.