Rant on Stock Analysts

I must say that I do not like stock analysts.

I have had a position in US Steel (X) for several weeks. It has gone up over $10 / share since I have owned it. Today a stock analyst said that it has gone up too much, and downgraded the stock, so of course the stock dropped several dollars. I think the stock was undervalued when I bought it, and is probably still undervalued, not by as much though.

Several years ago a lot of analysts got in trouble with the SEC because they were paid off by companies to give them favorable ratings.

I think the average stock investor would probably do better if we didn't have the analysts offering their ratings on stocks. Investors should do their own research rather than relying on the "pros" to offer them advice. People over react to the analysts recommendations, rather than thinking for themselves. If they don't want to think for themselves, they should be in mutual funds.

I haven't heard too many analysts downgrade Google (GOOG) even though it is wildly overvalued. I can only find one analyst who has Google rated as a sell, as opposed to 8 with buy ratings. Do they not remember when the tech stocks all bombed in 1999. Most of the tech stocks that tanked were overvalued then.

I think Google was fairly priced when they IPOd. Regardless of the share price, $85, the brokerages that ran the IPO did a good job. Google could have released more shares at a lower price, but didn't want to. I have heard people say that Sergey Brin and Larry Page admire Warren Buffet and want to emulate his business, Berkshire Hathaway (BRK.A, BRK.B). I do not think that Google will turn into a technological Berkshire Hathaway. One day Google may deserve a price near $200, but I don't think that will be in the next several years.