Analysts Can’t be Right All the Time

Feb. 9, 2016 | RedChip Companies

Most investors don’t realize that Wall Street analysts are wrong more than they are right. At the big investment banks, we find analysts putting “Buy” ratings on stocks after their institutional desks have built their positions, giving the ball to the retail brokers to put their clients in as the institutions are profiting from the rise in the stock. Best to get in a stock before the traditional Wall Street analyst discovers it. Find stocks that the pack is not thinking about, but that have strong management, upward revenue and earnings trends, and large market opportunities.

In 1992, RedChip put coverage on what was then a small company in Seattle, called Starbucks. The stock was trading at $6.50 at the time of our coverage. RedChip was the first to put independent, non-banking research on the stock.

Starbucks went public on June 26, 1992 at a price of $17 per share and closed trading that first day at $21.50 per share. We issued our coverage when the stock was a split adjusted $6.50. Those who bought at $6.50 if they held through today, would have a 12,247% gain. A $10,000 investment then, would be worth $1.2 million today.

"I work with many of the companies that would be RedChip companies. And we certainly ascribe to the same view that the RedChip Companies do, which is Discovering Tomorrow's Blue Chips Today."

  • Bob McCooey, Senior Vice President, NASDAQ Stock Market