I just finished the 2006 mock in book 7 and this question baffles me: a guy has made a recommendation based on a four month analysis. The answer says that a “four month analysis does not constitute a reasonable basis for an investment recommendation…” But I can’t find in the books HOW long is the “minimum” to observe data for a recommendation to be reasonable. Anyone know?
I don’t have my book with me but I think he observed a trend within a 4 month time span. I got the question wrong too, but I can understand where they are coming from. He didn’t analyze a company for four months, he just observed a trend that occurred within a time span of four months.
Good question, in the GS piece on value investing they mention something like 10 years for a moving average trend is good enough as a “short-term” (no quote, from memory) indication…
reasonable basis? for months is too little to create a trend? didn’t do the q just wondering
Related to that same question, in the vignette it says that the analyst observed financial data that had been posted on a website before its scheduled release. If that analyst used that information as a basis for a recommendation would that violate the code for Material Non-Public Information? Or is that just part of the overall mosaic? T/G
I said mosaic. I forget if it was marked right or wrong though.
i think all he did was run a regression with 4 months of data and then made a recommedation solely on that info. i also got it wrong.