Should Analysts Who Don’t Own Stocks Be Trusted?

You’ve almost certainly seen it: Every time an analyst on CNBC comes on to talk about a stock there is The Screen. We find out whether they own the stock, their family owns the stock, their firm owns the stock, their pet owns the stock, etc.

More often than not, the answer is "none of the above": They don’t own the stock they’re talking about, and neither does anyone they know.

I say these people with no conflicts shouldn’t be trusted. How am I to take seriously someone in the financial services business who tell people to own a stock, but doesn’t own it themselves? They have no skin in the game, and in a business entirely built around wealth creation, self-interest and greed, that makes me suspicious. Granted, I don’t want them self-dealing, but I do want to know that their interests are directly aligned with mine.

Do others feel differently? Or is this just another sign of analysts’ utter irrelevance?

Related posts:

  1. Rich Bernstein and Why Analysts are Bad for Stocks
  2. Reason #7,459 Why Some Analysts are Bad For You
  3. Finance Academics: Your Stocks are Efficient, But Mine Aren’t
  4. Kudos to Me: Microsoft Guides Analysts Lower on Vista Outlook
  5. Oracle’s Earnings Miss: They Shoot Tech Stocks, Don’t They?