Merrill will limit "buy" ratings to 70%

Discussion in 'Wall St. News' started by turkeyneck, May 14, 2008.

  1. NazSpaz


    It's pretty amazing that they have to enforce quotas to get analysts to stop putting out so many buy ratings. In one sense I am glad they are semi-acknowledging how ridiculously long biased the rating system is, on the other hand does anyone here really trust a rating anyways as we all know how crappy and corrupt the whole analyst system is. It won't give me any faith in Merrill's or anybody else's ratings either way.
  2. Underperform ratings will only be given to non-clients. :D
  3. people actually pay attention to buy and sell ratings from sell side analysts?
  4. The Merrill ranking system simply allows for legal ease regarding protecting their brokers in court when clients lose money.

    The ranking system has no evidence of money management success either currently or in the past.

    In short, the ranking system is just a legal protection tool for Merrill and has absolutely nothing to do with making money for the client.
  5. An artificially enforced system will not lead to any sense of reality in ratings; it simply underlines how useless and broken the entire system is. If an analyst is covering an industry where the large majority of companies will over-perform then they will be forced to find 20% of the companies to give under-perform ratings to....whether they deserve it or not.

    This is similar to forced ranking systems in corporations where the executives state that 10% of the people will be Exceeds. If you have a team where there are 3 out of 10 are over-performers only one will be rewarded. Likewise if your team has no outstanding performers then you will still be forced to find one.

    The entire concept of artificially enforcing ratings to some set numerical standard (based on no real data) makes no sense.

    - Greg
  6. People who follow Merrill's analyst recommendations are all rich.

    Just get them in a room and ask them. :D
  7. Many UPS stock holders lost their shares when Merrill Lynch suggested "covered call writing" with "no downside risk" in the summer of "03 as the stock kept rising and shares were called away.

    In 3/03 ML analyst opinion on UPS was SELL.

    M had a buy rating on Delphi two weeks before the stock went bk.
  8. The people who take Merrill's analyst recommendations are all rich....

    In SPIRIT.... :D