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The Sell Side Still Says ‘Buy’

Posted By Barry Ritholtz On April 13, 2004 @ 8:57 am In Finance | Comments Disabled

barrons_ol_logo.gif [1]

Here’s another interesting news item that slipped in under the radar: The Sell Side Still Says ‘Buy’ [2].

As the accompanying table (courtesy of Barron’s) makes clear, fundamental Analysts have become somewhat less inclined to say “Sell.” Analysts gave “Sell” or “Strong Sell” ratings to only 9.4% of stocks in March 2004, compared to 10.3% a year earlier.

I’m the last person to defend my Fundie brethren; However, the time to cry “Sell” would not be at an early phase of what many believe (but not me) to be a multi-year expansion. Indeed, it would be silly to have a lot of sells in the midst of a powerful rally.

So what we really are complaining about here is this: People who’s job it is to analyze individual companies within a narrow sector do not have a good ability to determine when the economy’s overall expansion (or contraction) begins to end and subsequently reverse. Phrased differently, these folks cannot tell the difference between a mere Market Rally and a more enduring Bull Market. (Not that its really their jobs to tell)

Of course, there must be some stocks worthy of the “Sell” rating — but more than 1 out of 10? I dunno . . .

Wall Street Bulls Ahead

As of March 1, 2003 As of March 1, 2004
  # of Recs % of Total # of Recs % of Total
Strong Buy 5,092 20.9% 5,824 21.3%
Buy 5,979 24.5% 6,422 23.5%
Hold 10,769 44.2% 12,472 45.7%
Sell 1,884 7.7% 1,942 7.1%
Strong Sell 641 2.6% 632 2.3%
  24,365   27,292

Source: Thomson First Call

The Sell Side Still Says ‘Buy’ [2]
Allison Krampf
Barron’s Weekday Trader, April 8, 2004


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[1] Image: http://online.wsj.com/barrons/article/0,,SB108034671358166825,00.html

[2] The Sell Side Still Says ‘Buy’: http://online.wsj.com/barrons/article/0,,SB108146056717578357,00.html

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