You'd be better off doing the opposite of broker's recs.

bigadaj

grey_gym_sock wrote: »

why would anybody expect investment banks to pay brokers to come up with share recommendations, and then distribute them free to the general public, purely as a public service? isn't there something ever so slightly implausible about that picture? (not about the concept of giving stuff away for free in general, but about the finance sector doing it.)

I'm not so sure it is really.

It's an easy way of gaining publicity, if that is their intent, and theoretically of PR.

Whether the recommendations are valid with respect to Chinese walls is of course a totally separate issue.

The majority of broker recommendations are effectively short term punts, deciding that at this moment in time a share is worth more or less than that which the market determines, or sometimes the same. It's a way of trying to generate trade which is what most of these businesses make their money doing, so you can't blame them, the main problem is that the recommendations are so frequently wrong.

I may well be wrong but this side of the brokerages seems like a classic job to put the new graduates onto, give them an outline of what they should analyse and how to present it and let them have a go. Whether they are right or wrong seems to make little difference, if it increases turnover even slightly then it has served its purpose on generating buying and selling fees.

BananaRepublic

These brokers make their living buying and selling shares on behalf of clients. No doubt they give out 'free' tips in order to encourage people to buy and sell shares, and increase their business revenue. But they are not like unit trusts, for example, who have teams of people whose job is to research companies, in order to maximise the returns from their portfolio. Brokers do not have huge teams of people doing research. So where do their recommendations come from? It may well be that staff members spend a small amount of time looking at companies, and markets, for a good story e.g. "Brexit means a weaker pound, so UK manufacturing will be a good investment". As ever, you get what you pay for.

Glen_Clark

BananaRepublic wrote: »

As ever, you get what you pay for.

I'm sure all the overpaid 'analysts' and fund managers would agree with that.

Malthusian

EdGasket wrote: »

These are broker recs; totally different.

Yes, newspaper tipsters are probably better at it than broker tipsters as they can draw on the expertise of their colleagues on the horse racing desk.