Analysts make mistakes

When it comes to analysing corporate performance, individual investors are surely at a disadvantage. You will find it difficult to know how many cars Tata Motors will make in 2009, how many hotel rooms Indian Hotels will be able to sell in Europe, etc. However the “international” fund manager has access to all this and more information. Moreover, he cannot “analyze” the numbers once he gets them.

However if you define experts a Morgan Stanley, J P Morgan, Citibank, UBS….please think again. They are not experts, they are in the business of selling financial products. Look at the amount of write-offs that they are doing. Look at the amount of down sizing.

Did you see the apologies that UBS and Citibank have been giving. Did you see the amount of credit derivatives that Citi has been forced to take back from clients? It is scary.

Citibank in one of the TV interviews said “we will make money in India for the losses in sub-prime”.

Unless they make 70% commissions in unit linked insurance and fantastic commissions in Mutual funds, I do not know how.

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2 Responses to “Analysts make mistakes”

  1. Ravinder Makhaik on August 11th, 2008 at 12:44 pm

    So people up at Citibank are hoping to cash on the India growth story to meet their losses in the sub-prime market.

    Here in the small town of Shimla, Citi Bank shut down its only ATM, as a cost cutting measure for it was paying an exorbitant rental fee of about Rs 1 lakh per month to maintain its brand value at an important tourist destinaton.

  2. When you are in the business of selling and analyse the macro factors of businesses, the very analysis is made from the background of ‘marketing’ and you may also be blind to see the negative factors. and finally, what the investors get to see? a rosy picture! No wonder why these the so called analysts make mistakes.

    well, that’s one way to look at it.

    Even when you get your calculations and analysis right , it may be tempting for you to give a whole new shape to your story, because its compelling to make money here for the losses you made elsewhere. do they keep integrity intact? we do not know. investors better watch out.

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