Since the dawn of the internet era, stock markets have become increasingly accessible to the general masses. This rise in accessibility has been accompanied by an equally spectacular growth in investment related businesses. Suddenly, the market place is filled with brokerage houses offering stock tips and wealth management services. Gone are the days of checking stock prices in financial newspapers and investment newsletters. These days, news travels at the speed of thought and market data comes to you with just a click of the mouse. With so much information at disposal, making investment decisions couldn't have been more easier. Quite to the contrary, its been observed that a majority of people turn to investment analysts for their investment decisions. This, despite the fact that the begining of this decade saw a major market meltdown, which was brought on by irrational hubris of the same professionals.
A somewhat similar anomaly was observed and reported in December 2007. Bloomberg published this article suggesting how some market analysts maintained their 'buy' and/or 'hold' advice for their clients, even after the prices of the stocks under advice fell as low as 40%. Now, this behaviour is not exactly new to the market. Analysts have been known to put up 'buy' guidance only after taking positions in stocks and later on, maintaining 'hold' guidance while offloading the same shares in the market at higher prices. This blatant disregard, displayed by these analysts, of their responsibility towards their customers is both appalling and disgusting.
Quite clearly, investors need to realise that their investments cannot be left to the expertise of the analysts alone. Just as in 2001, the current crisis has lessons for investors to learn. The biggest of these lessons is not quite obvious enough and it is that the analysts that you trust your money with may quite possibly be just as qualified as you yourself are. So, do your own research and challenge their decisions.
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