December 18, 2007
They may be wrong but at least they’re honest
Scott Patterson of the Wall Street Journal thinks the fact that Wall Street analysts did not predict the downturn in investment bank earnings from the credit squeeze is "perhaps one of the biggest analyst lapses since Wall Street made darlings out of such 1990s Internet companies as Pets.com."
I don’t know about that. Surely the point of the analysts’ scandal of the early 1990s was that they knew that internet companies were no good but failed to tell investors because their banks wanted to gain advisory and underwriting business?
Getting earnings forecasts wrong may be embarrassing but it is hardly a scandal. In fact, I would say it is the opposite: it demonstrates that inside information was not leaking down from the top of the banks to their analysts. Chalk one up for Chinese walls.
So corruption is a scandle but utter incompetance isn’t? The government’s data loss was due to incompetance and misfortune and yet is considered a fairly large scandle, why should the same not apply to analysts?
Posted by: Richard C | December 20th, 2007 at 5:15 pm | Report this comment