Wealth Manager - the site for professional investment managers

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

How to profit: listen to your broker, and then do the opposite

How to profit: listen to your broker, and then do the opposite

Listening to your equity broker was the winning strategy of 2017 – but your prosperity depended on doing the opposite of what they said.

The 10 biggest consensus buy tips last year fell by an average 9.3%, according to an AJ Bell analysis, said the Times. The 10 biggest consensus sells meanwhile proceeded to rise by a collective 9.5%.

Shire was the most eagerly tipped stock of 2017, winning buy recommendations from 25 out of 30 brokers analysed. Over the calendar year the pharma former star dropped 16.7%.

The value added by the sell side community has been thrown into sharper relief this month as it has started billing for services, following the launch of Mifid II rules banning the tact provision of research in exchange for placing orders.

AJ Bell research director Russ Mould said: ‘Mifid II has shone a bright light on who is paying for analyst research, but of equal importance is whether that research is actually adding any value.

“The cost of this research ultimately will be born by customers and a look back at 2017 suggests these ratings needs to be treated with kid gloves, especially when it comes to the FTSE 100.

‘Ultimately, what the data does seem to show is the well-informed, diligent, expert broking community has little more idea of what is coming than anyone else, at least in the short term.

‘Anyone prepared to pick their own stocks must therefore thoroughly research any company for themselves before they even think about buying it shares.’

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play From Cleveland to Gary: Tom Becket's US road trip

From Cleveland to Gary: Tom Becket's US road trip

Psigma Investment Management's Becket went off track on a recent trip to the US to learn what's really going on at the heart of America.

Play JP Morgan AM ETF boss: why cash is a viable asset class

JP Morgan AM ETF boss: why cash is a viable asset class

JPMAM's head of international ETFs says a 'wall of worries' is driving investors to cash-like ETFs.

Play It's not all about the money: how private offices retain staff

It's not all about the money: how private offices retain staff

Private offices often have a reputation of paying less than private banks. Then how do they keep employees motivated?

Read More
Your Business: Cover Star Club

Profile: Deutsche's wealth boss plots a UK expansion

8 Comments Profile: Deutsche's wealth boss plots a UK expansion

Deutsche Bank may be among the world's biggest but its UK wealth business has punched so far below its weight its effectively a start-up says CEO Morley

Wealth Manager on Twitter