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Whatever Would We Do Without Analysts?

By Seth Jayson (TMF Bent)
January 11, 2005

"U.S. stocks are set to open lower Tuesday, as the absence of economic data has investors focusing on corporate news and Intel Corp.'s (Nasdaq: INTC) fourth-quarter results 'will either kill or encourage the market,' according to an analyst."

I spent a couple hours today trying to think of the right words to point out the sheer ludicrousness of that teaser, which I found this morning on Yahoo!'s (Nasdaq: YHOO) finance page.

In the end, it seemed that nothing could be more damning than to leave it alone to fester and ponder its genesis. Who is this anonymous analyst? What gives him/her/it such clairvoyance? Do people really pay money for this kind of nonsense?

Of course they do. But that doesn't mean it matters. This is how the game is played. Stressed-out editors need their headlines; they need their scoop. Nothing going on? Some reporter calls her favorite analyst for a sound bite, and voila, you have your morning's market roundup. Pretty sweet, eh?

Never mind that it's a completely meaningless exercise in navel staring, and rest assured; no one will be criticized should the breezy assumptions turn out to be 100% wrong. No one will even remember.

Quick reality check for newbies and vets alike: No one knows which way the market is headed. No single stock moves the whole market; I don't care if it's a giant like Intel, Ford (NYSE: F), Google (Nasdaq: GOOG), or today's gloomy Gusses Advanced Micro Devices (NYSE: AMD) and Taser International (Nasdaq: TASR).

If this grousing sounds familiar to you, it's because you may have read this, or this, or maybe even this. In these mini-jumbo-diatribes, I took great pains to point out just how colossally wrong the "consensus" Wisdom of the analysts and the press corps has been when trying to make blithe predictions for the future of a sector, or an entire market.

As my colleague-in-crustiness Bill Mann has also said repeatedly, despite our appetite for financial news, the vast majority of it is meaningless within a few moments of publication. It's the informational equivalent of celery. It costs you more to digest than it gives back, and, if you consume too much of it unwashed, lingering toxins might eventually poison you.

It's worth remembering that even if the fizzy generalities come true -- a dead watch is right twice a day -- sector bets and overall market direction mean nothing to a Foolish individual investor. You're small. You're nimble. You can find undervalued businesses with stellar prospects in any environment. Buffalo Wild Wings, (Nasdaq: BWLD) anyone? And since you don't have to answer to some guy with his eye on a retirement watch and his tie on too tight, you can invest as you wish. Those are huge advantages. If you want some help with this fun and rewarding process, we can help you there, too.

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Seth Jayson thinks that you should think for yourself. At the time of publication, he had shares of Buffalo Wild Wings but no positions in other firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.