Should We Trust These Analysts ?

According to Investopedia
Analysts are typically employed by brokerage firms, investment advisors, or mutual funds. Analysts do the grunt work for brokers, preparing the research that brokers use. Analysts usually specialize in specific industries or sectors.

I personally rely on analyst recommendations as one of the factors deciding buying or selling of stocks. Analysts are in a much better position to make a judgement about the stock than you and me. They go through alot of financial reports and indicators which passive investors dont even want to know. However one important question everyone should always always try to find out is Why ? Why are analysts giving buy or sell signals. Good analysts will always give you a satisfactory explanation and back their recommendation by giving you their sources.

That said, what are analysts overall recommending in 2007 ?
A research shows that the analysts are not too bullish in 2007. The overall buy recommendation as a percent of all recommendations is at its all time low over 10 years. This is scary isnt it ? Does that mean it is time to sell off ? Probably not. Infact as a rule of thumb, when the herd is in agreement on the market’s direction, the opposite usually occurs.

Recommendations: Dont let some indicators scare you. Again the key is research. Try and understand why the analysts are bullish or bearish about the stock. If you find their reasoning satisfactory, only then bet accordingly.