Let Wall Street's Best Minds Speak Out

I for one never want Humungous Bank & Broker to zip the lips of their best people. I want to know their most extreme opinions, from house to house and within the house.

I see that Goldman Sachs has a SELL on Micron Tech (NYSE: MU $14.60), with a near-term price target of $12, while Standard & Poor’s has a STRONG BUY with a 12-month PT of $26.

One short-term trader I know says he’ll accumulate MU under 14 and distribute it over 16 if these prices are achieved before year-end. That scenario could possibly provide a +14.3 pct return in a very short time-frame. And if MU were to tank from $14.60 to $12, the short trader would gain +17.8 pct.

In any event, I wanted to show you the divergence of opinion on the Street.

Within a single firm, there are also widely diverging views at times. Take, for example, the UBS research reports I provide. The disclaimer is clear:

“Regarding two sources of research: Two sources of UBS research are available to our clients. One is written by UBS Wealth Management Research which is part of UBS Global Wealth Management & Business Banking (the UBS business group that includes, among others, UBS Financial Services Inc. and UBS International Inc.), whose primary business focus is individual investors. The other is written by UBS Investment Research, which is part of UBS Investment Bank, whose primary business focus is institutional investors. Because both sources of information are independent of one another and reflect the different assumptions, views and analytical methods of the analysts who prepared them, there may exist a difference of opinion between the two sources.”

Markets depend on opinions, and on differing opinions. But something I heard this morning stuck in my craw.

CNBC anchor Mark Haines stated on air today at 11:00 am: “The two people I don’t trust are realtors and car salesmen. Not that they are dishonest. They just have a vested interest in keeping spirits up.”

Doesn’t that take the cake?

With respect to Mr. Haines and the subject of “keeping spirits up”, readers know my views.

CNN calls themselves “The most trusted name in news” and CNBC is all about “The greatest story never told”. It’s all a crock that nobody believes, so why they play this mindless game is beyond me.

But -- and this is important -- it’s only been in recent years that Wall Street has permitted their best people to speak their minds -- as long as they cover themselves with disclaimers. We need to encourage that.

Wall Street is full of brilliant minds, and these professional players don’t all agree with their colleagues, or with Talking Heads. We need to hear their differences of opinion, directly.

From the media, many of whom are on the sidelines cheerleading advertisers and promoters and their friends, we need to tune out. If they were simply journalists, we should listen.

Comments

[Paul Meisel:]

If you view CNBC as 50% entertainment with some factual information as background, it isn't so bad.

Anyone who blindly invests based on what they hear or read, without doing some of their own analysis, is doing themselves a disservice -- they should get someone else to make their investment decisions. But your main thesis here is right on. Analysts provide value by providing insight into why they think a stock should be valued at some level, and we as investors are free to weight or reject those varied opinions. A difference of opinion could result from a variety of different assumptions, and our assessment of those assumptions is what makes markets move.

2006 Nov 22 11:18 AM

[irondoor91:]

Yes, Wall Street is "full of brilliant minds". You can witness this by the "brilliant" performance of the in-house mutual funds that the brokerages cram down the accounts of their hapless customers. While this is a travesty, even worse is the current move afoot by the SEC and Congress to prevent the retail investor or pension plans from putting any money into funds that can short the market or use leverage.

The S&P 500 only recently recovered back to even after six years and a 40%+ drawdown. Of course, that represents a excellent investment choice according to the regulators and the index fund distributors. Just buy and hold into the sunset.

2006 Nov 23 10:40 AM