I read and post a lot of articles on SA and curious to know what others think of it. Do many of you use it to make investment decisions? Or more for news/information gathering about a stock you’re interested in? Thanks
I’ve found it can be most helpful with microcap stocks and very niche markets. Basically anywhere “real” analysts aren’t covering it already.
For more liquid/visible stocks and sectors, no, I don’t like SA.
It’s pretty bad. Mostly written by people with limited understanding of both investing and the industries they’re discussing.
Take for example your idea to write a thing on Air Lease.
http://www.analystforum.com/forums/investments/91348987
Most of the other authors are in your same shoes, interested in the industry and writing for practice but lacking background. The depth and understanding just aren’t there. It’s mostly reactionary to news flow and overloaded hype calls.
It’s a good place to go if you want to see what the newsflow is around a name or if you’re trying to get familiar with the basics of markets though. Just don’t put any real investment weight on it.
Damn BS, that;s harsh! lol
I would agree with BS though that most of what’s written on SA is pretty novice. Some do sound smart, but many of these are just copying and pasting from sell-side reports.
Try Value Investor’s Club or SumZero.
Some people are credible but most of them are crap, like BS said it’s a decent place to get some basic understanding of the firm.
I like the Wall Street Breakfast article on SA
+1
Most “real analysts” are also bad, just misguided in a different manner.
It’s not who says something, it’s what is said. All sources offer some good information, including SA and AF. Sifting through the crap is the hard part and where your own skills come in.
If I want advice on how to find the best steak, I’m not going to ask the line cook at McDonald’s.
^Might know where the best deal on a steak can be found though.
^ I’m not sure that’s a great counterpoint. If I’m being honest, my analogy was not designed to go farther than my first point. But let’s play. How would he have heard? Can he afford to dine at the same steakhouses that I’m interested in? If not, how did he hear about this steakhouse? Secondhand tales? From the big businessman steak eaters that go to McDonalds for…lunch?
That’s all fine and good if I didn’t get 10x more reasearch than I have any desire to read thrown at me on any topic in a single day. You’re completely ignoring noise / signal ratio here (as does most of the industry). One of my biggest frustrations comes from sales and SS research teams constantly trying to force feed me research I frankly don’t want or need and having to nod politely while they drone on about their value add and new desk analyst.
All sources do not offer good information (in fact most sources do not), particularly not SA or AF. Since my problem is more a shortage of time (to spend on actual analysis or thought on a nearly infinite universe of investments) and rarely a shortage of noisy research, it’s more about figuring out where to spend my time rather than naivly perusing every random publication in search of a kernel of truth.
What is your criteria when judging a source? Accuracy of information? Investment record? Originality of thesis? Education of authors?
I tend to require a base level of understanding of the concept of expected return and probability of success or failure. This narrows the field down pretty quick. If someone doesn’t even attempt to handicap their recommendation, I know their analysis isn’t going to offer me much. They really have no idea how to judge a security. It’s not about how many times you are right or wrong on a binary call. These analysts or journalists should have stuck with liberal arts.
One thing a really like about platforms like SA is that I can be made aware of something I completely missed, maybe a BDC trading at an insane discount to book or a debt issue that is completely disconnected from the equity. Some of those guys must just read financial statements on obscure issues all week long. Debt conversions on tiny issues are another one. Was only able to extract a couple 100k on an arbitrage opportunity I discovered because of SA a couple of years ago, but can’t complain about easy money simply because I followed a SA author I don’t know from Adam. The arbitrage was real and the money was green.
I typically don’t rely on SS research that much. It’s one area where I’m a little different in my approach from otheres. Most of my stuff is self generated. For SS, people I just look for people with regular and somewhat detailed data integrated with a macro focus. Macro work is big for me because it can take a lot of time to pull together. I don’t even look at recommendations or factor them in. I only use the underlying data and see if there are any points there that are either under my radar or contrary to my existing view (at which point I’ll try to either reconcile it or adapt my view).
My approach is basically 1) what are the conesensus forecast model inputs, 2) do I think the actual data points are likely to be higher or lower or possibly skewed to one side 3) are they missing or underemphasizing a driver (do they have the relationship right) 4) does the valuation and market talk seem to reflect this? I don’t even mess with the model itself. If you can figure out the inputs, the rest should fall into place. I’m a very macro guy (I don’t do any real micro work) so commodities fits me well.
So I think I look at things differently because I don’t worry about whether they handicap their recommendation since I really don’t look at recommendations other than as a market view datapoint.
Oh geez, SA is bottom of the bottom! Articles are like “I read some textbook and now I’m going to try really hard to invent some elaborate reasons why markets should do what I think they should do”.
It’s also big into Americentrism, lacks world perspective.
Click bait.