True story: The other day, I (Brian) received an email with this as a subject line: "Buy these stocks and make money."
Of course, the email ended up touting a $0.04 penny stock with an unpronounceable name (it looked fake). Apparently, an "analyst" somewhere assigned a short-term "price target" of $1.10 to this stock.
We're liberally applying quotation marks here to reiterate the obvious absurdity of The Stock That Will Return 2,650% in One Month.
Back to real life
Ridiculous claims in the stock market are nothing new, of course, and ridiculous claims from analysts are especially old hat. (Just ask the analysts who pegged Countrywide Financial "outperform," with a $45 price target, in the fall of 2007.)
We'll even go so far as to advise you to fight -- violently, if necessary -- whatever urge you may have to click on the "analyst opinions" tab at Yahoo! Finance. While it may seem prudent to see what the "smart money" thinks of your stock, this page is one of the most dangerous places on the Internet -- truly NSFW, as the tech-savvy say. It's not even worth the five seconds it takes for your browser to load the page.
That's because (1) you get no context and (2) nearly every single stock -- surprise, surprise for an industry that makes money by convincing you to buy stocks -- is considered "undervalued." Here are a few notable examples:
Company
Closing Price, May 27, 2009
Analyst Target Price (Mean)
Analyst Target Price (Low)
AT&T (NYSE: T)
$24.07
$30.42
$25.00
Gilead Sciences (Nasdaq: GILD)
$41.44
$56.00
$48.00
MasterCard (NYSE: MA)
$167.38
$196.39
$140.00
Union Pacific (NYSE: UNP)
$45.31
$57.87
$50.00
Symantec (Nasdaq: SYMC)
$14.80
$19.75
$16.00
AES (NYSE: AES)
$8.87
$13.10 Continued... |