When we analyzed the price targets of various research analysts for last year, this is what we found:<\/p>\n
Most ‘BUY’ ratings were on stocks that had already gone up significantly. The previous 100-day returns before a ‘BUY’ was announced were +23.29% (mean) and +21.49% (median). The next 100-day returns of the same set of stocks were +18.24%<\/strong> (mean) \/ +17.98%<\/strong> (median.)<\/p>\n For stocks rated ‘SELL’, the previous 100-day returns were +16.93%\/+18.47% (mean\/median). And they ended up under-performing the ‘BUY’ pool of stocks: +12.50%\/+14.14%<\/strong>. But only a brave soul would have gone short in 2014. Even the next 5-day returns for ‘SELL’ rated stocks were +1.22%\/0.77%.<\/p>\n One can be excused for thinking that analysts were just chasing momentum, given the above summaries.<\/p>\n BUY’s did not seem to have a dominant short-term effect: On an average, they did out-perform the CNX 100 index. Next 100-day CNX 100 returns: Out of the 718 ratings we analyzed for the year 2014, 565 (~79%) were BUYs and 12.25% were SELLs.<\/p>\n It will be interesting to see how they do this year.<\/p>\n
\n5-day : +0.97%\/+0.76%
\n20-day: +3.78%\/+2.90%
\n50-day: +11.03%\/+11.40%<\/p>\n
\nBUYs: +12.33%\/+11.67%
\nSELLs: +13.23%\/+12.04%<\/p>\n