At The Motley Fool, we have our fun with the Wall Street analysts. We mock their pinstripe-and-wingtip attire. Their multimillion-dollar bonuses. And not unrelatedly, their failure to recognize the tech bubble -- or worse, recognizing it, then applying lipstick to the pig and pimping it to the individual investor. What's more, their ceaseless stream of upgrades and downgrades, sometimes mere days apart on the exact same stock, make Jim Cramer look like a poster boy for the "long-term buy-and-hold" movement.
As such, it may seem counterintuitive for me to take a quick look some of the hottest analyst upgrades and downgrades of the hour.
Isn't that a little hypocritical?
Guilty as charged -- if that were all I were doing. After all, an analyst's upgrading or downgrading a stock means little when viewed in isolation. That's especially true when you consider the heft of the firms doing the "analyzing." When a major brokerage firm issues a downgrade, the mere publication of the news often suffices to spark a selloff, "proving" the analyst right -- in the short term.
The analyst's record over the long term is far more significant -- and that's what we'll be focusing on in this column.
Mr. Market? Meet Mr. CAPS.
Motley Fool CAPS, the Fool's tool for rating everything from stocks to investors to analysts to the long-term durability of the Toyota Corolla (give us some time on that last one), lets us take a magnifying glass to more than just the short-term meanderings of Mr. Market's mind. We'll also be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.
Speaking of the best ...
This morning, brokerage house AG Edwards issued a slew of upgrades on stocks ranging from Kohl's
But does Edwards know what it's talking about? How much weight should an investor give its ratings? For an objective view of the firm's past performance, we turn to Motley Fool CAPS, which shows that while Edwards' analysts are right more often than not, their accuracy rating of 58% isn't exactly awe-inspiring. Nor does the firm place within the top 10% of Wall Street firms. That said, its current CAPS rating of 97.75 is certainly respectable, earning the firm the title of "CAPS All-Star" and placing it within the top 3% of CAPS players, professionals and laymen combined.
Here are a couple of the picks that got Edwards where it is today:
| Company |
Edwards Says: |
CAPS Rating: |
Edwards' Pick Beating S&P by: |
|---|---|---|---|
|
Essex Corp |
Outperform |
** |
52 points |
|
Verizon |
Outperform |
*** |
7 points |
Overall, Edwards has built up an enviable record of success. Although it's far from the best Wall Street player, it does a pretty darn good job compared to the other 21,000-odd CAPS raters -- most of whom, granted, don't have Bloomberg terminals and teams of research analysts backing them up.
But here's the thing that may surprise you most: AG Edwards isn't the current score leader on any of the four stocks it upgraded today. To find out who's the best of the best on predicting these stocks' performance, click the following links for:
And don't forget to add your own thoughts on these companies while you're at it. At CAPS, we don't give a hoot if you've got a TMF in front of your name or a CFA behind it. Performance matters most. Think you have beat some of the market's best investors? Follow this link to sign up for CAPS, 100% free.
Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 25 out of more than 21,000 raters. Legg Mason and Home Depot are Motley Fool Inside Value picks. The Fool has a disclosure policy.
