Kaminsky's Call: Listen To The Markets
Morgan Stanley, Vice Chairman
"Garbage in, garbage out."
I'm not talking about what you'll likely eat this holiday weekend. Sadly, I'm referring to the method many analysts use to arrive at valuations for stocks.
For example, yesterday on The Strategy Session, Bill Katz, a Citigroup analyst I respect very much, said he liked the asset managers (in fact, he upgraded Janus that morning) based on a slew of data that can more or less fall into the category of "historical valuations."
The problem was Mr. Katz was working off data that was based on the last 60 years, not the last decade, which has seen a fundamental change in the industry.
And that's one of the reasons why, at least in regards to the financials, many analysts are behind the curve.
My "Call-to-Action": Ignore The Street and listen to the markets. The price action in the stocks is telling you more than any research report.
Case in point? Check out the number of financials on the 52-week low list:
- Goldman Sachs
- Janus Capital (despite an upgrade)
- Morgan Stanley
- Piper Jaffray
- Charles Schwab
- State Street
I am stopping at ten, but the list goes on. And yet there are positive analyst reports to be found on pretty much every one of those stocks, even as they continue to dip to new lows everyday.
Now, I realize that analysts have limited information to work with. But when I look at all those names, I can't fathom how any analyst could come up with a near term bullish argument.
Unless of course, you were relying on garbage data.
"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.
Gary Kaminsky does not hold any equity positions.
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