Let us discuss the creature who 'drives'
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
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
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
Type(3): A rare one: The analyst does 'perceptive'
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
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
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!