The Predictive Value of Analysts

A Thomson Reuters study (from March 31, 1994 to December 31, 2007) of the S&P 400 MidCap index revealed that analysts selected the group which performed the worst. Similarly, on the Dow Jones industrial average, the lowest analyst-rated stocks returned average gains better than the index.

The underlying result, with these studies and others which we published earlier, clearly indicate that you can do better by avoiding analysts' picks. Their highly recommended stocks regularly underperform substantially.