They are the ones who have – or ought to have – their fingers on the pulse of a company they cover. Their intellect is what investors trust. They are the ones who go through a company’s business and financials with a fine tooth comb, unrelenting in their persuasion of the truth, unforgiving in their wrath when they discover a wrong. They are the High Priests for the investing fraternity. They are the Analysts.
It would be funny if it were not sad how many times this tribe has failed the world when it most needed them. A group that was tasked to lead through foresight ended up championing the hackneyed phrase that hindsight is 20/20. Time and again Financial Analysts have shown that they really do not add any more probability points for an investor who is taking aim with his dart at the universe of stocks in search of a sound investment.
Performance of Analysts in the Satyam fiasco is no different. Brokerage houses (institutions that hire the Analysts) have been almost falling over each other to shed positive light on a stock that now isn’t even worth the electricity it takes to show the blinking ticker on a trading screen. Here is a snapshot of – even I am tired of using the phrase – irrational exuberance. A collective display of irrational exuberance actually (and this is just between 01-Dec-08 to date).