Have Analysts Gotten Honest?Written by Mark Mahorney
It caught my attention when I heard an analyst on a popular financial news program tell investors to sell a stock because too many analysts liked company, citing fact that there were no sell ratings.It seemed perfectly logical to me that analysts wouldn’t be telling investors to sell 3M (MMM), which has one of most consistent positive earnings records in history of stock markets. But being suspicious of conflicts of interest between brokerage firms and analysts I decided to do a bit of fact checking anyway. While stock did not have any sell ratings at time of writing, there were quite a few hold ratings. Now I feel compelled to diverge here and say that hold rating seems quite illogical to me. If a stock is good enough to hold it’s good enough to buy, and vice versa if you wouldn’t want to buy it then you shouldn’t want to hold on to it either. As it turns out, average analyst rating for 3M was only slightly and insignificantly better than average for all stocks in Dow Jones Industrial Average, of which company is a component. But what was most interesting about ratings on Dow components was that, despite numerous and serious legal problems, AIG (AIG) was tied with General Electric (GE) and Du Pont (DD) for third best rating, only bested by Citigroup (C) and Microsoft (MSFT). AIG was actually more highly recommended by analysts than J.P. Morgan Chase’s (JPM) and American Express (AXP).
| | Utah, the Nation’s Bankruptcy CapitalWritten by Charles Essmeier
Congress recently passed Bankruptcy Abuse Prevention and Consumer Protection Act, designed to minimize frivolous bankruptcy filings and to require debtors to repay some of their debt. Once it takes effect in October, 2005, law will make it harder for those with problem debt to have their debt wiped away by courts. Most will have to agree to a five-year repayment plan. In passing this new law, members of Congress suggested that our bankruptcy courts are filled with cases involving not ordinary citizens, but with reckless gamblers, shoppers, and drug abusers. Is that really case?
One would think, given accusations, that highest bankruptcy rate in Untied States would be in place where such vices were common, such as California, New York or even Nevada. If problem gambling is thought to be cause of so much bankruptcy, then one might assume that Las Vegas would be bankruptcy capital of world. How odd it is, then, to discover that Utah, one of only two states that prohibits gambling completely, has highest per capita incidence of bankruptcy filings in United States. Utah? How can that be?
Utah has a number of aspects that, taken on their own, don’t suggest that bankruptcy would be a problem. Added together, however, these things create a recipe for disaster:Utah has nation’s highest birthrate. Seventy
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