The Secret Ingredients of Top Analysts?
March 29, 2006 - Investing Expertise
What makes a guru, or analyst, good? The research on this question is predominantly “technical” rather than “fundamental,” focusing on performance and performance persistence rather than process (hence, the frequent use of the word guru, implying mystical insight). In their preliminary and incomplete paper of November 2004 entitled “Determinants of Superior Stock Picking Ability”, Michael Mikhail, Beverly Walther, Xin Wang and Richard Willis seek to identify the determinants of consistent analyst stock picking outperformance. Using a sample encompassing 268,170 recommendations issued by 4,923 analysts for 7,845 firms during 1985-1999 from Zacks Investment Research, they tentatively find that the best analysts tend to: Keep Reading