Professional Stock Analysts’ Recommendations
Implications for Individual Investors
DOI:
https://doi.org/10.1016/S1057-0810(96)90024-4Abstract
Conclusions regarding analyst performance often depend on the evaluation technique employed. Using a wide variety of techniques, wefind that although there is some evi- dence that analysts do have the ability to identify undervalued and overvalued securities, individual investors generally experience inferior portfolio performance by following analyst recommendations published in the ‘Market Highlights” section of USA Today (even before transaction costs are included). Asaresult,individualinvestorsshouldview studies thatpurport to show superior performance with skepticism. This statement is partitularly true when the assertions are based on stock index comparisons.
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