Quant Macro Investing

Risk Taking Disciplined

Wall Street recommendation

Such data available from Bloomberg – quite handy isn’t it?  I wonder if similar data available in Asia, and if this indicator helps to identify turning points for market.


(Pragmatic Capitalist) … the reason why 95% of all investment banks and advisors maintained at least a high level of buy and hold ratings all last year.  They want to keep you in the game.  See the chart below and notice the consistent 5% sell ratings by analysts.  Do you mean to tell me that during one of the greatest collapses in economic history the level of stocks rated “sell” never moved above 5%?  That is an utter embarrassment for the entire Wall Street community.  In my own business I rarely have more than 5% of the entire stock market on my BUY list.


October 31, 2009 - Posted by | Indicator setup


  1. Confidences are everything in financial markets. So I totally understand the reason why investment bank and advisors want to make investors stay in the game. But the dilemma is that I don’t know whether the investors still have enough money and courage to bet on this recovery. Let us watch it.

    Comment by Roger Hu | November 1, 2009 | Reply

  2. The indicators do not seem to help us indentifying the turning point. If we look at the SP500, the turning point we can be April, but there is not much change in the trend of buy, sell and hold curve. Of course we can retrieve the data from bloomberg terminal and do regression on the index and these curve. I guess the coefficient is not high.

    anyway the post remain me the saying that:
    we should buy when everyone fear and sell when everyone get greedy.
    It is not a bad idea to buy/hold stocks when the investment bank stop suggesting us to buy.

    Comment by cpl | November 3, 2009 | Reply

  3. Investment bank and advisors have no reason to encourage the investor to plump down the price even further. Therefore, I don’t believe this suggestion convey any valuable information.
    Some institutional investors turned their money from stock markets to others, and some just bet some big by buying low. We can find the hints from market data like transaction volume instead from this Wall Street Recommendation.

    Comment by Roger Hu | November 4, 2009 | Reply

  4. This is funny. Frankly I never believed in advisors recommendations. Who are they? They are part of the market! So do you believe in a dealer’s recommendation in a Casino?

    Comment by Andy | November 7, 2009 | Reply

  5. Rather than looking at the amount of ‘sell’ ratings (for no analyst wishes to downgrade a stock, risking the wrath of others) , the ‘buy’ decline is likely to induce a sell-off amongst less sophisticated investors (the ones that rely heavily on ratings in the first place). This conveys some information of the herd instinct that one has to avoid. Ironically, the ratings may be useful after all!

    Comment by Gabriel | November 15, 2009 | Reply

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: