This, again, is what I love about Wall-Street Stock analysts. They are so often more wrong than right that one wonders why they are getting paid anything to do what they do.
Take Apple Computer (AAPL) as the latest example. Note the chart below from Finviz documenting recommendations for the last quarter – all except one being on the buy side with price targets ranging from a new high ground around 130 to as high as 179. And only one downgrade in the bunch. One.
AAPL closed today at 97. All these analysts’ “Buys”, “Overweights” and “Reiterateds” came before now, higher up.
I suppose these guys have all sorts of fundamental reasons why AAPL should go up. The company has tons of cash, many fine products, avoids a lot of taxes, had a reputation for industry-disruptive innovations.
But the thing about fundamentals is, in the end, none of them matter if the price of the stock no longer agrees with them.
When everyone who loves AAPL, and buys its story, already owns it, one wonders if the analysts ever wonder who are they going to be able to sell it to; when a company achieves a market cap north of $500 billion (let alone the $700 billion Apple bought for itself), one wonders is any of these analysts might wonder if history repeats – with the exception of Exxon-Mobil – every company reaching that lofty number has eventually had its stock cut in half.
A lot of these mistakes could be cured, or at least alleviated, by adding market timing to their analysis but I’d bet they would join the rest of the Wall-Street chorus harping that no one can time the market. No one. Fact is, it is they who can’t time the market. One glance at a stock chart would not have hinted the stock was going down, it would have flat out said it was going down.
But since they keep getting paid despite being consistently wrong for whatever reasons, why should it matter to them?
Well…hard to believe, but maybe one day these guys’ clients might take note.
By the way none of this should be construed as investment advice. As a solitary trader when I’m right only the market pays me, and when I’m wrong it takes it back.
P.S. AAPL is going to be a buy soon…for a bounce to $106 or so, maybe $111, but longer-term…mentioned above something about being cut in half so enough said.
(right click the image for a larger view)