If you listen to most financial professionals or advisors, they’ll tell you to hand over your money to them…
…that the stock market is too complex to figure out
… And that they have access to research and tools that you can’t get
And quite frankly, I’m not sure they always have your best interest at heart.
You see, every day, Wall Street analysts will publish their research and recommendations… and you’ll often hear them get on TV, radio, and podcasts to talk about “their predictions” and why they think a stock will go up or down.
But as far as I’m concerned, I wouldn’t trust them one bit.
- They have no skin in the game
- Their research is by biased and littered with conflicts of interestAnd when you have that going on… you’re bound to give out some horrible calls.
Tesla is up about 14%, and trading at $223 per share… since the analyst made this brutal call…
…Imagine if they had an actual short position in the name?
They’d probably be blown out the water by now.
(Every trade alert I send has skin in the game, and while my Sniper Report offers research, you better believe I have real money behind the ideas)
Are Wall Street Analysts Misleading You?
If someone gave you a stock recommendation without having a position in it… would you trust them with their research
Probably not, right?
Well, it happens all the time in the markets.
You see, analysts provide research… giving stocks buy, hold, and sell recommendations.
However, analysts don’t have skin in the game.
In other words, they’re “giving” people advice on what they should and shouldn’t be invested in… not only that, the financial modeling behind their research tends to be lackluster, as the markets don’t care about their projections… and worst of all they’re not putting money behind their “best” ideas.
They’ll use things like the DCF model, 3 statement model, M&A model, Forecasting model, to name a few… if you ask traders whether they use any of these… chances are they don’t and they might’ve never heard of them before.
In addition to analysts using financial models that don’t really give you an idea of how stocks move… there’s a conflict of interest with investment banks and the company.
The Conflict of Interest With Investment Banks
Now, we’re really focused on sell-side analysts here. Sell-side analysts publish research reports on stocks that they cover… and are distributed to customers and offer a specific recommendation.
On the other hand, buy-side analysts work for hedge funds, mutual funds, pension funds, or investment advisors (these money managers actually buy and sell securities for investors or their own accounts)…
… unlike sell-side analysts, buy-side analysts actually have to determine the potential value of a stock… and whether it fits the fund’s investment strategies… so there’s not too much room for bias there.
Now, the problem here is the fact that sell-side analysts work for investment banks who provide services for companies.
So if these banks want companies to do business with them… sell-side analysts actually are pressured to give buy ratings. Think about it like this, if an analyst gives a stock a “sell” recommendation, do you think that company will do business with that bank?
They’ll go to another investment bank whose analysts have a “buy” rating on the company…
… this is why we see a bulk of analyst recommendations as “buy” ratings... because banks want to grow their revenues and earnings.
I’m not saying all analysts are bad, because buy-side and independent analysts typically work for money managers… and they actually have some skin in the game.
However, it’s clear that you probably shouldn’t put all your money into a handful of stocks that analysts recommend.
So what’s the solution?
For example, I’ll look for catalyst events, analyze corporate events, and any other information that I think could move a stock – all this information is easy to find if you know where to look… once I find my best plays, I send them to all Sniper Portfolio clients.
Who Needs Analysts If You Have This Strategy…
The difference between my research and analyst’s research is the fact that I put my own money behind my ideas… if I’m right, I get paid 100% of the profits… if I’m wrong, I feel it in my trading account.
If analysts are right… they just get touted as being smart… if they’re wrong, nothing happens… they don’t lose money… they still go into work and collect a paycheck.
Anyone can tell you where a stock will be after the fact, but I don’t work for Hindsight Capital…
… I like to spot the moves before they happen and take profits… not make a call and just sit there and twiddle my thumbs.
Just last week, I locked in a 40% winner just by buying and holding a stock for around a month.
(Tired of missing out on trades like these? There’s only one way to get these alerts… click here to get started now)
Now, you might be wondering, Well, Kyle… did this company have any analyst coverage? Maybe that’s what sent the stock higher…
Actually, according to Finviz, this stock hasn’t been covered by analysts in over a year and a half.
You see, this company doesn’t have a massive market cap like some of the stocks that analysts cover. In other words, since Ritter Pharmaceuticals (RTTR) is so small… it wouldn’t actually benefit investment banks to use their resources to cover a company that would probably not give them any business.
You’re probably wondering what it was that I looked at that let me know to buy the stock…
… now, I can’t give you all the details because that information is privy to Sniper Portfolio clients… but I can tell you I looked at my favorite chart setups and upcoming analyst events.
Now this wasn’t the only trade I nailed this month in the Sniper Portfolio… earlier this month, I had a 71% winner.
(Wondering how to get involved in trades like these? Click here to get exclusive access to Sniper Portfolio)
Again, with this trade… I provided an easy-to-follow plan for clients BEFORE the stock moved up 70% and had a positive catalyst… and I had skin in the game.
I even updated clients as I was taking some profits off the table… and let them know where I was moving my stop, and my plan in case the stock started to pull in.
That said, if you’re ready to receive unbiased research, and trade ideas that I’m backing up with my own money then I recommend you check out what I’m doing with my Sniper Portfolio. It’s the closest thing you’ll get to set it and forget it.