Never trust an Analyst or an Investment Banker

The reason given being they are self-serving. Although they will give you the impression that your interest is paramount, they too benefit from pushing their investment products.

One of the most interesting thing I came across which is worth sharing here is understanding the job of the analyst. We come across analysts' reports regularly. In the present cyclical bull market many of these reports are very bullish. However, recall how many of these analysts' reports were bearish, downgrading the stocks, even when the market was already at the depth of the recent severe bear market.

The most important point to take home is that the MAIN job of an analyst is not to analyse!!! It never was and neither is even today. Hear this, and repeat this often. Keep this in your mind whenever you read an analyst report. (Of course, ze Moolah's blog is an exception, he is not an analyst. Tan Teng Boo, Dali's blog and a few others are in this category. ;-0 )

In fact, an analyst is a salesman. His present job description is very much that of a stock-pusher. This is not unlike that of a drug dealer pushing drug. Of course, this is a rather poor comparison, but you do get the point.

They are there to dress up the report on the company to make it nice so that investors can buy or sell their products they have an interest in.

Who are these present analysts? Are they the white haired chaps who have worked for many years on the job. Most unlikely. They are often perhaps the young 23 to 25 year recently graduates from elite universities who have been given the task to produce the analyst reports on the various companies. They certainly lack the experience of the market.

However, let us not totally dismiss the roles of the analysts and the investment bankers in our investing. Of course, do read the reports but always invest based on your personal opinion and research.