Forum Archive Index - December 2000

["G Stolwyk" <stolwyk@wave.co.nz>]

 

 

Hugh,

 

Let us discuss the creature who 'drives' private broking.

H: You mean  the 'Analyst'?

G: Yes, I believe that there are type(1): those who have been assistant analyst and have been promoted to analyst. Most of them are still maturing; some will be anxious to give a conservative verdict on a company. Many will grow into respectable analysts.

 

Type (2): Analysts who can be relied upon to compose reasonable reports after visiting a company. Theirs is a difficult job: Have they been told that which corresponds with reality or is the CEO trying to boost the share price?

There are other possible variations of his intentions.

No wonder that some analysts work with 'butterflies' in their stomach!

 

(H):Yes, they are constantly trying to adjust their predictions after some new development and hope that they are close to the actual results which are to be issued by the company in the future.

I know of one company CEO who time after time put out some very optimistic forecasts. The analysts had a remedy: they put a 'hold' or 'sell' on the company. They would also boycott any meetings.

 

G: I can understand that; the analyst's reputation- and the shareholder's decisions- depend on the recommendations, he makes.

 

Type(3): A rare one: The analyst does 'perceptive' research.

They are part time psychologists as well because they are very sensitive to any 'vibrations'.

They instantly follow up any unsatisfactory answers from the CEO with further questions.Their mind is totally focussed.

 

They may well lose some sleep while thinking about the data they were given or how to use it. Their judgement tends to be often superlative! 

 

H: A brokerage firm will send such an analyst to an important company where there is a chance of being able to do further  business with them.

 

G:I have read some brilliant reports which were put out by these people; I noticed the high quality of research supported by data from many sources and one sensed  the originality of it.

 

Why? Because very few could ever produce that type of work! It is really another form of art!

 

H: You are right, the investor should know something about the work the analyst is doing; after all, our investment decisions often depend on it!

 

 

Gerry