Barron’s Alan Abelson points us to a rather intriguing — and sadly, none too surprising — data point:

“Week in, week out, Bloomberg taps Street analysts for their prognostications of where they expect the S&P 500 to wind up the year. Despite the turmoil in the markets, those stalwarts—13 of them—have steadfastly held to their prophecies. They labor for Deutsche Bank, UBS, JPMorgan, Oppenheimer, HSBC, Bank of America, Credit Suisse, Goldman Sachs, RBS, Barclays, Bank of Montreal, Morgan Stanley and Citigroup.

After glancing over this sterling cadre and their predictions, we can report that their expectations vary rather widely. The most bullish is looking for a gain of around 26% and the least bullish one of nearly 8%. The S&P, incidentally, closed on Friday at 1091.60.

What really caught our eye, though, is that not a single one of these worthies was bearish. Which strikes us, of course, as enormously depressing.”

Amazing . . .


Beware the Long Tail
Barron’s, June 12, 2010

Category: Analysts, Investing

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Wall Street Still (Always) Too Bullish”

  1. NormanB says:

    No bears on Wall Street and you are enormously depressed? I’d say you are enormously naive. This isn’t news to anyone who has been around for awhile.

  2. Owen Money says:

    Bloomberg is really doing a full court press on the bears. Here’s an article that recently appeared in Bloomberg/Businessweek that denigrates some of the favorite bear prognosticators.


    BR: We discussed this Friday morning

  3. ToNYC says:

    The meek have inherited the earth; not so much depressing as history repeating fin de siècle events. The market for advice is as usual 90% skewed to buy/investment narratives. I welcome bids from followers..the better the stories, the fatter the goose. Thinking foie gras.

  4. Abhishek says:

    I would have been surprised if it had been otherwise.Its not very hard to convince a person of an idea if his paycheck depends on it.

    Perma Bears are always considered evil, while strangely perma bulls are not .

  5. nemo says:

    “The most bullish is looking for a gain of around 26% and the least bullish one of nearly 8%.”

    Where is the full-length Bloomberg/Businessweek cover story making fun of these clowns?

  6. perra says:

    Don’t ask the barber whether you need a haircut.

  7. Bloomie says:

    They were too bust roasting the bears!

    Time to Slip into Something Less Comfortable?
    Jessica Silver-Greenberg
    BusinessWeek, June 10, 2010

  8. dsawy says:

    Per your article on the “Buy on Dips” divergence between retail investors and pro’s, we have here another indication of the divergence of opinion and outlook between what Wall Street “professionals” like to call “smart money” (themselves) and “dumb money” (the retail investor).

    It is funny how few of those who are in the group deemed “the smart money” saw the housing crash coming, or the equities melt-down, or the Euro-contagion, or the anemic “real GDP” we now see.

    While perma-bears will lose one a lot of money (in terms of foregone gains from bull runs), the perma-bulls can cost far more for the retail investor. After all, a 50% decline requires a subsequent 100% gain to regain parity.

  9. censeo says:

    I see 7 responses above none of which seem to do with your blog/Abelson’s point. But maybe I’m missing out on something. Excuse me while I go chat with the mirror.

  10. philipat says:

    I wonder if that’s why they are called the “Sell” side?

    CNBC et al should remind this crew of their forecasts on the prior occasion for each appearance. But I suppose they would quickly run out of guests. But it would be more constructive than climbing all over the Rosenbergs and Roubinis but uncriitically cheering along the Dolls and Paulsons.

  11. Captain Jack says:

    I would love to see some kind of rigorous behavioral science study on the hidden social dynamics of the Wall Street analyst environment.

    I mean, just think about it. These guys work for big investment houses, who in turn work for big corporate clients. Even if there is supposed to be a “chinese wall” between analysts and bankers, you can’t wall off the culture. When all these firms are basically basically bending over backwards to get a piece of GE’s business or XYZ corp’s bond offering or whatever, how in the world are analysts supposed to be expected to express opinions with anything like a neutral stance.

    Sebastian Mallaby’s new book on hedgies starts out by described the genius of Alfred Winslow Jones (the first hedge fund guy). Basically Jones sucked at market timing, but his market picks were consistently excellent because he sourced lots of brokers and deliberately compensated them in a manner that reflected genuine alpha performance (as opposed to beta movements of the market).

    So just imagine, if you will, a culture where all analysts actually lived or died (in terms of compensation) based on how well their recommendations and upgrade / downgrade timings performed measured against some wholly pragmatic measure. It would be a whole different ballgame.

    In fact, I bet you this is why hedge fund analysts could be considered a far more successful group, on a far more consistent basis, than Wall Street analysts. When you stop working for Kiss-Ass Megabank and start working for Absolute Performance LLC, all of a sudden the culture and the benchmarks start reflecting genuine performance instead of a hidden impetus to sling bullshit.

    All of this seems so obvious… it’s hard for me to fathom why it isn’t discussed and dissected more.

  12. van schaik says:

    When the experts are consistently wrong isn’t it time for new experts?