Rita Gunther Mcgrath | Blog | The Discipline of Strategic Growth

Analysts’ asymmetrical recommendations

One of the most interesting aspects of our financial markets is a fundamental asymmetry in reality versus analyst recommendations. Simple math suggests that half of all stocks will under-perform the market average, yet analysts persist in offering “buy” (48.8%) or “hold” (45.7%) recommendations, leaving the “sell” category pretty poorly represented (5.5%). These numbers are as of December, 2007, as reported by the Wall Street Journal on February 16.

Even more interesting, the trend away from issuing “sell” recommendations has accelerated somewhat since 2003. The Journal provides the information in graphical format.