Barron’s worked hard this weekend to make the case that analysts are as bullish as ever on stocks. Trouble is, their data doesn’t really support their case. Here are the aggregate figures comparing analysts’ recommendations now and a year ago:
The above may, or may not, be compelling to you. You can see some slight declines year-over-year in sell recommendations, but these are very small differences, on the order of a quarter-percent or so. Do we really have that much confidence in the absence of noise in these figures?
And even if we do, it is possible to put another interpretation on Barron’s numbers. If you take the data and aggregate it into two categories — Buy and above; and Hold and below — you could conclude that the opposite is true, that lower recommendations are more common than more upbeat recommendations. See the following figure:
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