Trending
Click on the image above to watch the video.
Stock analysts often provide ratings on stocks (buy, hold, sell) and price targets. This practice is totally absurd.
Price targets are based economic calculations, yet we know that stock prices, especially in the short term, are largely influenced by mood.
And we know that stock ratings are heavily biased. All you need to do is look at the percentage of buys, holds and sells. There are very few sells, because the moment an analyst puts a sell rating on the stock, you can kiss future investment banking business goodbye.
Related: Goodbye Roboadvisors, Hello Roboallocators
The one minute video below demonstrates a real time example of the silliness of both the stock rating and target price.