I'm just looking at a new estimate on LEN that JMPS made. They think they'll make between $2-2.40 in 2007 and $3.15-3.50 in an industry that is clearly ailing and full of woes right now...their target price is lowered from $58 to $52! What in the world makes them give them a ridiculous multiple like 20-26 times in an industry that's about to take a HUGE hit!? I'd have to say they're doing it due to inside interest in their firms. I'm guessing that's what the majority of you guys think. But I still want to hear. cheers.
analysts want to be able to talk to the firms they cover. the fundamental question is what is the purpose of a research department
"..the fundamental question is what is the purpose of a research department" because you can't tell your client "P/E is bullshit"?
Analysts are the mechanics of the conventional orthodoxy. You pick the cars you drive and they make it expense to keep them running when you mistreat them. How old way your daughter when she learned to adjust the values?
Besides the fact that that made almost zero sense...analysts are a bunch of idiots who would be happy with 15% gain a year. Mechanics? More like propagandists and accomodaters...they're like a bunch of mechanics who tell you that your car is going to be okay becuase they know you don't want to spend money fixing it. Rarely do they break big ranks. As a generalization, I'd say if you want to outpace inflation...then okay...hire them as your mechanic! If you want to make money, well, then don't.
Many, many people, even institutional investors follow analyst estimates to some degree. If they lowered their estimates its for a reason, even if they are wrong, so many people follow them, that it becomes a reality (to a certain degree). Have you heard the term self-fullfiling-prophecy?
In pre-literate times societies had story tellers. How very silly people are in wanting more from the important role of the analyst. The analyst is the story teller for events or forecasts for corporations or for economic/financial matters.