But if only pragmatists (vs. idealist) are practitioners, and by the previous admission that only those that that are not black-balled (i.e. only those that follow the heard mentality) are influential in setting the ‘market consensus’, than what the layman investor is using to make an investment decision is, by extension, incomplete and highly biased making the information somewhat value-less and potentially dangerous. When you start picking away at these things, it really makes you think about the credibility of the system by which many many individuals, both professionals and laypeople alike, use to make investing decisions. And if the aim of the industry is to support efficient markets, than isn’t this approach somewhat self-defeating. By not including all information, the industry that is touted as bringing efficiency to the market is, by definition, holding information back and thereby distorting the fair value of the securities it valuates.
darkhelmet Wrote: ------------------------------------------------------- > Etienne Wrote: > -------------------------------------------------- > ----- > > ^^^ I’m guessing most of the idealists are > still > > trying to break into the industry. > > > > And, no, I-bankers don’t make all the > adjustments > > for a pitch. Only a minority would even know > how. > > Sad, but true. > > > So you admit that the industry’s analysis is sh^t > then? Not what I meant… In i-banking, analysts generally have quite a bit of freedom in terms of developing their model and presenting the numbers. This was the case for me as a first year, at which point I had had plenty of modelling training, but much less financial training. Messing around with the financials is a much smaller part of the I-banker’s job (compared to preparing pitchbooks, management presentations, coordinating / chaperoning buyer-seller meetings, managing the data room etc). Two additional points: -often, making adjustments is a subjective exercise, requiring detailed knowledge of the company and the industry. As an I-banking analyst or associate, you don’t have the time to learn a huge amount about the companies you work on, beyond the week or so that you might spend on the pitchbook (I left the industry because I didn’t think I was learning a great deal, despite 16hrs / day in the office) -A lot of very successful bankers don’t have a clue about this stuff. I recall having to explain to a director that IFRS was not going to eliminate goodwill, just goodwill amortisation. I then had to explain what the difference was between goodwill and goodwill amortisation. The guy was a rising star, now an MD (and team head) at a BB in London.