At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. With CAPS, we track the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the worst ...
"Risky." That's the word that comes to mind when reading the latest report on banking stocks out of professional stock-shopper Ladenburg Thalmann. In a high-risk, high-reward gamble, it chose earnings eve to begin coverage on three of the biggest names in U.S. banking -- Bank of America (NYSE:BAC), JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC) -- with buy ratings. (The fourth horseman of the recent banking apocalypse, megabanker Citigroup (NYSE:C), was notable mainly for its absence.)

As for the three banks that made Ladenburg's list, the analyst calls this trio the "bionic banks" -- rebuilt by government scientists at TARP into "better companies than they were two years ago, with more sustainable and attractive growth and return levels." Ladenburg predicts that as the economy rises, and the TARP taint recedes, we'll see all of 'em turn into "end-game winners," and producers of mighty profits to investors brave enough to buy today.

But is Ladenburg right?

Let's go to the tape
I wish I could answer you with an unqualified yes, and reassure you that Ladenburg knows precisely whereof it speaks, and say that your money's safe in these banking stocks ... but I cannot. Not based on Ladenburg's past performance in this sphere:



Ladenburg Says:

CAPS Says :

Ladenburg's Picks Beating (Lagging) S&P By:




18 points

Goldman Sachs  (NYSE:GS)



(12 points )

Regions Financial (NYSE:RF)



(67 points)




(70 points)

Fact is, Ladenburg's record with banking stocks is nearly as tarnished as the reputation of these banks themselves. Out of a total of 18 ratings handed out in the capital markets and commercial banks sectors over the past three years, Ladenburg has guessed right a grand total of ... five times.

Batting .278
That stat wouldn't look so bad if Ladenburg were an up-and-coming second baseman in the minor leagues -- but when it comes to picking stocks, a .278 batting average will absolutely kill your portfolio. And it explains why Ladenburg underperforms more than 30% of the investors that we track on CAPS (very few of whom, I should add, own their investment banks and employ teams of analysts to help them with their stock picks).

Suffice it to say that when Ladenburg Thalmann predicts we will see "growth investments, dividend increases and share buybacks" at its three "bionic banks," I suggest you take that prediction with a grain of salt.

Foolish takeaway
Now mind you -- I do not mean to say that Ladenburg Thalmann is necessarily wrong in predicting these stocks will go higher. Fact is, I'm not much of a bank stock-picker myself. I don't know what goes on in these perpetual black boxes, stuffed as they are with good loans and bad, mortgage-backed whoziwhatsits and collateralized doodads. And taking a page from the Warren Buffett playbook, when I see a sector in which I'm not competent to invest, I do not buy it!

But that's not to say that you should not invest in banking stocks -- not if you know what you're doing. All I intend to say here is that you should not invest on Ladenburg's say-so, because it's apparent that your guess is as good as its guess is -- and in fact, based on its record, your guess is probably better than Ladenburg's.

So here's your chance to shine, Fool, and help the rest of us understand these stocks a little bit better. Click over to Motley Fool CAPS today, and cast your vote for or against:

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith has no position in any of the stocks named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he was recently ranked No. 1,275 out of more than 145,000 members. The Motley Fool has a disclosure policy.