Wall Street Downgrade? No Big Deal
I pay no attention to downgrades by investment banks. And that’s because of my Wall Street experience. My personal experiences are that these analysts who work for investment banks are highly conflicted because of the fact that they have to support their investment banking business first and foremost.
So they are required to make sure that their ratings never annoy or irritate the companies. Or, sometimes they can even be used as punishment against certain companies that don’t give them business.
So an investment bank downgrading one of our stocks is not going to mean a lot in terms of what we are going to do in Profits Unlimited. I understand that over a day or two, a downgrade or upgrade can cause the stock to go down or cause the stock to go up.
However, I can also tell you that from decades, now, of research that’s been done into Wall Street investment bank downgrades and upgrades, they tend to have no real performance impact. And the track record overall of Wall Street analysts is quite poor.
I’ve been investing for more than 25 years. I started my career on Wall Street in 1991 as an assistant portfolio manager at Bankers Trust. I quickly advanced to prominent positions at Deutsche Bank and ING, managing multimillion-dollar accounts. In 2006, the owners of a $6 billion firm named Kinetics Asset Management recruited me to manage their hedge fund.