FDO and other companies

[PuppetMaster]

downgraded by Merril Lynch. Do you think ML is correct in thier assumptions?

[adios]

Family Dollar Stores (FDO) has 25 analysts (at least) covering the stock. When I see this kind of analyst coverage my first thought is why would I know more than the collective knowledge of all these analysts and the sharp traders and investors that follow this company. Ray Zee taught me this and he taught me well /images/graemlins/smile.gif.

[squiffy]

Analysts aren't always right. And they aren't always wrong. But they are often late, which bothers me a lot.

In other words, many seem to play it safe. They wait for a huge drop or huge increase in price, and then they adjust their ratings and try to explain AFTER THE FACT why the company is suddenly worth more or worth less.

It's like that commercial where the fortune teller is giving real-time predictions about the customer. You are wearing a blue shirt. It is raining outside.

Heck, I can see that a certain stock went up 50% or down 50% yesterday. What good does an analyst's post-rationalization do me?

I need reliable predictions about future value.

When Office Depot was at 10 or 14, I needed analysts to tell me it would go to 19.

Or when LUV was at 12.88 I needed analysts to tell me it would go back to 15.

I bought at 13.17 and sold too early at 13.70 or so. Should have held a few weeks longer. YUCK!!!!!!!!!!!!!

[adios]

To me the number of analyst covering a stock tells me how widely followed it is. That's important to me because if the stock is widely followed I have to believe that the current market price is right and represents the collective knowledge of a lot of people who have researched the compnay. I did notice that ODP has been doing well.

[PuppetMaster]

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To me the number of analyst covering a stock tells me how widely followed it is. That's important to me because if the stock is widely followed I have to believe that the current market price is right and represents the collective knowledge of a lot of people who have researched the compnay. I did notice that ODP has been doing well.

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I agree. The main reason I asked though was because I had read an article here (http://biz.yahoo.com/rb/040401/retail_wal_mart_research1_1.html)
where different analysts felt ML was jumping the gun.

Im just getting started, and Im noticing how reactionary the market appears. Is this normal?

[adios]

[ QUOTE ]
Im just getting started, and Im noticing how reactionary the market appears. Is this normal?

[/ QUOTE ]

IMO yes.