Statistic has shown that, most financial analysts fail to beat the broad market when it comes to investing. I don't know what is the exact reasons they are lagging behind. I think some analysts, maybe some of them do not invest their own money in the market and lack of investing/trading experience, thus they cannot feel the emotion of the market. I know a few analysts, when i chat with them, they really make me feel like they do not invest in the market, they just analyze stocks. That's why analysts give wrong recommendation to investor.
I attach a 3-years recommendation on Bursa Malaysia Berhad by a well-known research firm. I am very disappointed with their recommendation. They are totally wrong!! They gave a BUY recommendation on Oct 07 when Bursa share price at the peak (RM15, HIGH, VERY HIGH). Then they give a SELL recommendation on Oct 08 and April 09 when it was near its trough (RM5, LOW, VERY LOW).
Investors who followed their advice would surely lose money. Analysts are asking you to buy HIGH and sell LOW. I don't why the analysts still keep on making this kind of errors. I truly think these analyst should resign.
In my humble opinion, Bursa is a cyclical company. Its share price will hit the peak when the market is hottest and when trading volume is at the highest point, thus Bursa would announce high profit. Then it will slowly move to the bottom. The correct way of buying Bursa should be buy low then sell high.
Luckily, the research firm gives a better recommendation (BUY)now. I am disappointed to learn that even currently there are a few analysts recommending us to sell Bursa. Look like they still haven't learn from their mistake. Look like they are about to repeat the mistake.
I think investors should start buying cyclical stocks (Bursa) when the companies profit starting to increase and not when the companies have earned record-breaking profit.
I am not writing this to belittle any analysts, i just want to share my opinion. If I were to bought Bursa based on this analyst's recommendation, surely i would have lose all my hard-earned money in the market. I would get my hand burned.
When i come across these type of analysts' reports, to make good of them, i would just do oppositely what the reports recommend. My portfolio would perform better this way than what they recommend to do.
After Bursa released its better-than-anticipated quarterly result on Monday, there are a few analysts still giving a SELL recommendation. Look like to me, it is a BUY (doing oppositely what they recommend).
Ok, good luck to me.
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