Don’t Trust Brokerage Research Reports

Don’t Trust Brokerage Research Reports – Latest Example

Courtesy of Dr. Paul Price, Beating Buffett

Further Proof:  You Can’t Believe Brokerage Research

Brokerage analysts are always looking for an edge to show they offer ‘value-added’ information. If you’re not paying strict attention you might think they did. Here’s yet another example of how the cheating occurs.

Sterne, Agee & Leach made a bold call early Wednesday morning. They predicted Jos. A. Bank’s (JOSB) earnings would rise and they loved the shares at the current $41.63 price. As Will Shakespeare’s Hamlet once said, “Ay, there’s the rub.”

 

josb-barronscom-update-aug-29-2012-source-barronscom-sterne-agee-leach1

As it turned out, JOSB had already reported, and Reuters had broadcast JOSB’s much better than expected earnings and same store sales. Their shares were up 13.5% in premarket trading.

 

josb-reuters-report-aug-29-2012-source-reuters

 

JOSB had a gap opening at $48.00 – up $6.37 or + 15.3% from Tuesday’s close. Nobody could buy the stock today at anywhere close to the price where Sterne, Agee & Leach will take credit for putting on their recommendation.

Anyone silly enough to act on their research blurb by buying at the open was down 1.17% by 4 pm.

Why did Barrons lend their good name to this deceptive press release?

The day’s range was $47.29 – $49.48 with the intra-day low coming with just minutes to go. The chart speaks for itself.

 

josb-5-day-chart-source-morningstar

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