If there was ever an argument that you should rely on independent newsletters for guidance about financial markets, such as The Diary of a Mad Hedge Fund Trader, and not traditional brokerage houses, take a look at the chart below from JP Morgan.
It shows that despite all of the reforms passed after the dotcom crash and the 2008 crash, less than 3% of broker reports come with ‘sell’ or ‘hold/sell’ ratings. This is somewhat sobering news to learn on a day when more than 90% of the stocks in the S&P 500 are down. If an investment bank’s analyst dislikes a stock, they will simply drop coverage, rather than lose potentially lucrative business or risk potential law suits.
If individual investors are going to have a prayer of keeping their heads above water in the “new normal,” it will only be through studying truly unbiased sources and drawing their own conclusions. I tell readers to invest in themselves and the dividend will pay off large in their own investment returns. Despite many pretenders, there are no real “gurus” out there, no matter how hard you look.
If this reality is too hard to face, get used to the 0.01% you are earning in your money market fund, or the 0.19% you get with six month Treasury bills. These ultra-low short rates are going to be around for a while.
I often get asked about the results of my Trade Alert Service mentoring program, which is now hovering around a success rate of 80%, a figure that many find too good to be true. That’s why I update the results on my website every day for subscribers of my Global Trading Dispatch. That puts be at the top of a list compiled by the website, CXO Advisory (click here for their site at http://www.cxoadvisory.com/ ) which tracks data on these things.
Notice that only the top four, led by Ken Fisher and David Dreman, can outperform a coin toss, and only then, just. Media star and permabull, Abbey Joseph Cohen of Goldman Sachs (GS), is down in the dumps with a 35% success rate. This is why their call to buy Pulte Homes (PHM) was the stick to drive me off the bench to finally sell the stock short. See also that the bottom position is held by Elliot Wave guru, Robert Prector, who is right a dismal 23% of the time.