Flip a Coin
Posted on May 9th, 2013
NerdWallet investigated all the 883 analyst ratings issued on the Dow Jones 30 stocks in 2012.
All the recommendations were issued prior to January 1, 2012.
Then it compared the recommendations to stock performance through 2012.
NerdWallet found that only 51 percent of the recommendations were correct.
Yes, predicting stock movement is challenging, but you do expect highly paid analysts with decades of experience to at least beat the average. And 49 percent of analysts failed on that parameter.
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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.
The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.
The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.
Indexes are often used as a proxy for the stock market and cannot be invested in directly.