Understanding Upgrades/downgrades

[cpatte7372]

Hello all,

Can someone please educate on how to evaluate market analyst upgrades/downgrades.

I looked at a number of sites for an explanation and came up with the The Motley Fools rather cynical view of brokers upgrades/downgrades.

I was wondering if someone would be kind enough to check it out and let me know if you concur with their view - its not very long so it won't take up too much of your time.

Thank you.

Carlton

http://www.fool.com/Fribble/1999/Fribble991101.htm

[FibbGann]

I would say the article was too nice to the brokers/analysts.

Upgrades/downgrades is the biggest scam IMHO.

Most of them have no merit behind them. They are just what they said they are a cheap way for some analyst/broker to better his pocket.


Fibbgann

[gspiker]

I agree with FibbGann. While there are a VERY few honest analysts out there, most are just scamming us with upgrade and downgarde info.

Watch level two for a while and you will see. The first time I saw a broker selling into their own upgrade my jaw dropped. They had a huge position and would drop 10-20K shares at key price positions driving down the stock price a bit, then allow it to climb back up only to drop another 10-20K. They did it all day.

After that, I noticed it was common place. Biz. as usual. Want to buy a stock on the cheap - downgrade and then buy at the support levels on the way down. Want to sell at a good price, upgrade and sell at resistance levels on the way up.

I will admit its a shocker at first...but now I understand that the market is just the playing field for the brokers and funds and they use everything and anything (legal, not-so-legal, moral and very unmoral) to make a buck. After you get it, you can even use it against them, or if not against them, at least to your benefit (but each time I steal a $ from their games I like to think of it as a dollar they didn't get).

Garth

[cpatte7372]

Guys,

Thanks so much for feedback. Your comments are most welcome, as I was really considering taking the advice of these analyst.

Cheers

Carlton

[soylent]

There are also a bunch of studies that show if you bought the stocks w/ the lowest buying ratings (e.g. stuff that says sell/strong sell), you would outperform the market something like 2:1.

-c