The Trouble with Sell-Side Analysts

The ever-insightful Roger Ehrenberg of Monitor110 has a great post up about the trouble with sell-side analysts. Read the whole thing, but the upshot is that despite having their livelihood threatened in every direction, analysts continue to refuse to do the analytical work their job requires — and their struggle with option expenses proves it.


  1. Ehrenberg mentions that in his experience with analysts, both analytical rigour and critical thinking were found to be deficient. Considering i-banks prefer to hire either fresh MBAs or fresh undergraduates, few of whom would have had the kind of operational experience essential to recognising key issues in some of the businesses (things that do not always seem intuitive e.g. how do energy costs affect the popularity of Wi-Fi networks), I think many young analysts are hamstrung from the start. Considering further that many of these analysts are otherwise smart people, they are probably aware of – and self-critical about – the weaknesses in their critical thinking abilities. Catch22 perhaps? But if change is needed, may be the industry needs to examine how it hires for these roles.