A recent study shows that financial analysts worldwide were wrong about their earnings forecasts for companies “in excess of 25%” of the time. This is confusing, what do they do all day?
You’ve probably seen this chart below.
Stocks with the most analyst sell ratings outperformed while stocks with the most buy ratings underperformed. Remember financial analysts aren’t paid to be right, they’re paid to “forecast.” What inputs are they using? How do we know they’re right? How are each of those inputs weighted in their financial models? Think we have an idea. Garbage in garbage out. Watch.