Are Stock Analysts Useless?

By Spencer Jakab of The WSJ. Excerpts:

"The percentage of “sell” ratings rose briefly after the legal spotlight shone on Wall Street’s seers in the early aughts.

It’s back down to 5%, which is worse than it sounds. While stock prices broadly rise over time, only a minority of them produce those gains. Most don’t beat cash in the bank."

"The reason many professional investors keep relying on analysts who are chummy with executives is that it’s perceived as an edge."

"the nuggets they glean in conversation with executives, or the private management meetings those analysts set up for clients, don’t benefit individual investors."

"Take a post by Bespoke Investment, a little over two years ago, on the nine large U.S. stocks that Wall Street analysts recommended unanimously. Buying one share of each company (including one that underwent a merger) would have returned 17%. That’s just a third as much as an S&P 500 index fund through yesterday morning."

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