Sure, I'll admit it: I listen to the stock pundits. I'm curious. I'm interested. But luckily for me, I rarely act on what they say. The experts are fallible at best, and at worst, they're sometimes pretty bad at predicting how various securities will perform.

I was recently reminded of that truth by several stories at seekingalpha.com about Motley Fool Stock Advisor recommendation Yahoo! (Nasdaq: YHOO):

  • Citigroup (NYSE: C) reduced its rating for the company recently, from "Buy" to "Hold." The firm noted that it wasn't recommending selling shares, since the company might be acquired.
  • Oppenheimer (NYSE: OPY) also downgraded the company, citing its declining performance expectations.
  • Paul Kedrosky noted that the stock offered investors a compelling proposition at the recent price, but also suggested that the valuation could get even more compelling: "With Efficient Frontier's recent report showing that something like 97% of incremental December ad spend went to Google (Nasdaq: GOOG), it's tough not to worry that Yahoo will feel disproportionate pain in a weak market."
  • The folks at Ant & Sons also noted the chance of a buyout of the firm, along with this dismal outlook: "The bar was set pretty low heading into the [company's recent] earnings announcement, but somehow, Yahoo managed to disappoint and set the bar even lower for 2008."
  • An anonymous Wall Street pro who publishes his thoughts under the name "Notable Calls" said: "I feel it's probably too late to dump it but I just don't see any reason to buy it either. I suspect the stock will sink further in the near-term."

Of course, soon after those pronouncements, Microsoft (Nasdaq: MSFT) made a huge bid for Yahoo!, sending the latter's stock price up some 50%. The folks in Redmond must see a lot of value in the company.

Some get it right
Of course, not everyone commenting on Yahoo! was wrong. Morgan Stanley (NYSE: MS), for one, was bullish on the company, citing its cash hoard, its international holdings, and its improving financial figures.

Entrepreneur and strategy consultant Sramana Mitra may have seemed off-base, seeing "more pain" for investors while management "fumbles further," but she also noted, "I see immense value in the company with unique users now topping 500 million, and page views of about 4 billion per day." She added: "Investors with nerve could buy the stock based on the thesis that a private equity transaction is in the works. There is clearly value in the company, but the current management does not know how to extract it."

In sum
It's difficult (if not impossible) to know which pundits are right or wrong about a stock at any given time. That's not a necessarily a bad thing, though. If everyone had a similar take on a company, we wouldn't have the same opportunities to buy into a company at prices driven down by doubting markets.

At any given time, someone thinks that $40 is too expensive for a given stock, while someone else sees that price as a good entry point. Zip over to our own CAPS service, and you'll see tens of thousands of participants predicting how thousands of stocks will perform, with a wide variety of opinions. It's the same with Wall Street analysts. Looking up eBay (Nasdaq: EBAY) at Yahoo! Finance reveals that five analysts recently rated it a strong buy, 11 rated it a buy, nine rated it a hold, and two issued underperform ratings.

Overall, we're best off using our own noggins as much as possible. That way, if anything goes awry, we only have ourselves to blame, rather than blindly relying on someone else.

Of course, it can be helpful to consult others' opinions. That's why I like to read the recommendations of respected newsletters such as our market-beating Motley Fool Stock Advisor. I've gotten a bunch of great leads from Tom and David Gardner's list of high-performing stock picks. To tap David and Tom's full list of picks as a jumping-off point for your own research, sign up for a 30-day free trial today.

Longtime Fool contributor Selena Maranjian owns shares of Microsoft and eBay.  Microsoft is a Motley Fool Inside Value recommendation. Yahoo! and eBay are Motley Fool Stock Advisor recommendations. Try our investing services free for 30 days. The Motley Fool is Fools writing for Fools.