I would like to highlight an interesting post on rediff where three different analysts employing different prediction methods predict their levels for the sensex in the coming year. The predictions were made on Jan 7 2008. They went something like this:
1. Milind Karandikar - using Neowave theory - Sensex between 27000 to 39000 in the 1st half of 2008,
2.Devangshu Datta - using technical analysis - Nifty between 6600 to 7000 in six to eight months with a bottom of 5600 to 6100. Really?
3.Mukul Pal - using Elliott wave - Sensex not extending beyond 24000 in 2008. The closest of the lot, but still wrong by a long long way.
I would like to ask these gentlemen their views in the present context, but they have chosen to not display their respective e-mail id. They would probably be bearish now, taking refuge in some jargon or some hedging terms which they have been careful to qualify their projections with. Readers may judge the value of the predictions for themselves by reading the article here.Its very easy and popular to simply extrapolate the current trend and on that basis come up with fancy figures. The real test of an analyst is if he can go against the mood on the street AND end up being right. In that respect I admire people like Gul Tekchandani and Ramesh Damani who had the conviction to go against the popular mood and point out the risks, when markets were at their peaks. Some like Morgan Stanley have been screaming from the roof tops about overvaluations since the index was at 8000 and are delighted that their call has been proved right finally with the index at 21000! Some call, guys. Even a stopped clock is right twice in a day.
Saturday, June 21, 2008
WHAT ANALYSTS PREDICT & WHAT ACTUALLY HAPPENS
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9 comments:
Heck, when Reliance was trading at 1700, ABN-AMRO brokerage considered the stock overvalued and gave a sell call, with target 1400.
Hi mahendra
predicting stock markets is a fool's game. which is why some of prominent investors like warren buffett avoid it knowing that predicting the stock market has less than 50% sucess rates.
guess the analysts are paid to predict, which is why they do that. i would say investors are at a bigger fault if they heed to these forecasts and invest based on that
regards
rohit
I think even the biz channels need their drama. I recently ran into a bunch of posts on Moneycontrol where people (mostly women) were raving about how SAD Udayan Mukerjee looked when the market crashed. ROFL. I mean....they KNOW the bloke doesn't hold any stocks and they find that even more praiseworthy that he's crying for THEIR loss. I was in splits! And there's a girl too Mitali who arrange her face in precisely Udayan's expression.
ROFL. Forget about hedging advice or anything, people are so thrilled to see these two cry for THEIR stocks. RETARDEDDDDDDDD!!!
Hi Rohit,
You're absolutely right about analysts being paid. I met a respected technical analyst who appears on business channels on TV. He revealed that a leading business channel, not only gives the analyst a list of questions he is going to be asked, well in advance, but also the answers to those questions. The analyst is required to simply parrot the channel's views.
Hi Uma,
Your comment had me in splits. I understand exactly what you mean by downcast faces. Hey, these guys are supposed to be unbiased commentators and just look at how they react. When indices are at new highs they wear fool caps and blow up baloons and giggle like teenagers on their first date. And when markets crack you feel someone in their family just died.
Anyways I need to check out those posts on moneycontrol and have a good laugh. Crying for their loss, my foot (i feel like using something stronger), he's worried about his channels TRP'.
Mahendra, in advertising they say, "People buy on emotion and justify it with reason". I feel that way about markets. Markets are up? Find a thousand reasons to buy. Markets down? Find a thousand reasons to sell. That's it...
Punishing the analyst is easy. We all need somebody to blame, when rosy profits turn into a loss. This blog mentions about Orpheus CAPITALS analyst Mukul Pal view on India Outlook 2008.
"After Sensex 20,000 market expectations are for 30,000, but we don't see Sensex extending beyond 24,000 this year with the benchmark making a decade high this year"
Though the blogger discredits the analyst saying that the forecast was lacking, he does even carry his complete comments. The respective ANALYST was the only one calling for a BANKING and CAPITAL GOOD slow down and bust extending till 2010.
http://www.or-phe-us.com/orpheus/index.php?tabid=1&categ_id=286
There are no accountability standards for analysts. Atleast these analysts dared to express a view. To have a view and go wrong is one thing. And to shoot from the fence without really understanding the complete research is no short of empty criticism, which does not make this blog any more objective than the subjective analysts its attempting to bring down.
Punishing the analyst is easy. We all need somebody to blame, when rosy profits turn into a loss. This blog mentions about Orpheus CAPITALS analyst Mukul Pal view on India Outlook 2008.
"After Sensex 20,000 market expectations are for 30,000, but we don't see Sensex extending beyond 24,000 this year with the benchmark making a decade high this year"
Though the blogger discredits the analyst saying that the forecast was lacking, he does not even carry his complete comments. The respective ANALYST was the only one calling for a BANKING and CAPITAL GOOD slow down and bust extending till 2010.
http://www.or-phe-us.com/orpheus/index.php?tabid=1&categ_id=286
There are no accountability standards for analysts. Atleast these analysts dared to express a view. To have a view and going wrong is one thing. And to shoot from the fence without really understanding the complete research is no short of empty criticism, which does not make this blog any more objective than the subjective analysts it's attempting to bring down.
My advice to investors do not panic.
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