should i follow stock market analyst predictions? // stock trading strategies options basics 101 welcome to looking at the markets withdavid moadel today i'd like to discuss analysts stock analysts should we followtheir recommendations and predictions well just a quick observation have youever noticed how after a earnings miss a really bad earnings miss stock will juststock for a particular company will go down 57 sometimes ten percent and thenafter that all the analysts or most of
what is aapl, the analysts will downgrade the stock orthe company they will lower their price targets they'll say that theirrecommendations are underweight meaning that you know they don't recommend buyingthat stock they suddenly don't like the
company anymore they downgraded and andalso have you noticed that after a particularly good earnings report afteran earnings beat all all of a sudden the analysts most ofthem are all of them love the company and they love the stock and they're allbullish and they raised their price targets and they're overweight on thatstock meaning they really like it and they recommend buying it or they youknow that they say that it'sit's upgrade the upgrade the stock or the company well to me it seems like that's notforward thinking that's just chasing the price action
ok the big move has already been madeand they're just following there just yet you know if the price goes down fiveeight ten percent suddenly they're there bearish on it but that's after the fact it doesn't take a lot of predictiveability to be able to say that a stock is trending downward after an earningsmiss or it doesn't take much predictive prowess to be able to say that a stockis your company's doing well after earning speed and the stock already wentup ten percent or eight percent 5% whatever so if you're following analystspredictions then you're going to be
following people who are chasing theprice around and i think you know how that oftentimes ends up when you chaseafter the price move a lot of times that doesn't end up too well and so i reallydon't i do not recommend just following analysts predictions because theyusually make their predictions after the fact alright and their track record at leastaccording to these sources is not very good and it was not difficult at all forme to find articles discussing how bad analysts predictions are here's a wallstreet journal article entitled why market forecasts are so bad
analysts predictions are frequently lessaccurate than random guesses that's pretty bad alright and if youwant to you know go back and read these articles the web address is right hereat the top here's another one barons analysts poor predictions baron takesthe wall street analyst community to task for its poor aggregate performance here's the economist the accuracy of equity researchconsistently wrong what does that tell you alright here'sbloomberg china's stock analysts were
among the world's worst amid surpriseroute and this is after the this was during a time recently whenwhen the shanghai composite index went down alright and they have a nice graphic here that saysnot even close forecasts for china's stocks were wayoff alright so those are just a few examples so do i think that analysts no more thaneverybody else well read these articles you know
you can either you know type in the webaddress yourself or just google the the title of these articles and a lot oftimes you can find the article articles that way and i think it's pretty clearthat at least to me that if your trading plan is based on following analystrecommendations you know that that's not much of a trading plan personally i i almost think that theseanalyst recommendations upgrades downgrades and so on are there almostcontrarian indicators yeah you can almost go the opposite way and and dopretty well because of their poor performance overall alright so hopefullythat's not your trading plan to to just
follow what these analysts are doing allright or what they're recommending and if you want to put together a realtrading plan one that is geared toward thinking for yourself okay feel free to contact me my name is david modell and you cancontact me at david modell @ gmail.com whether you've lost money in the marketsconsistently in your sick and tired of that and you want to do better you want to be more consistent you wantto have a plan that that you know is based on what you think makes sense andwhat the data and the information that's
presented to you is telling you to dorather than just following somebody's recommendations to buy this or sell thatyou contact me please and if you like this video by all meansgive it a thumbs up on youtube leave a comment i like i like the comments a lotand you can subscribe to my channel that would be great because then you can getthe latest videos that i'm putting out alright so again feel free to contact meanytime and thank you so much
