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Wall Street Just Lost You 160 Percent

By    |   Monday, 24 Aug 2009 12:25 PM

Wall Street analysts, many of whom get hefty bucks for their knowledgeable and hopefully right investment advice, were wrong big time last March.

Among the more than a dozen companies who advised clients to buy European energy producers and U.S. pharmaceutical firms and sell banks and retailers were giants Citigroup Inc. and Bank of America Corp, according to data acquired by Bloomberg.

An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show, write Lynn Thomasson and Adria Cimino for Bloomberg.

Advisers were shocked to see the market do the exact opposite of what they predicted, as firms which previously posted the worst earnings leading the 46 percent gain in the S&P 500 from a recent 12-year low.

"Analysts are attached to fundamentals," Roman Bosher, head of equities at Groupama Asset Management told Bloomberg.

"This (was) a technical rally, a rally of sentiment," he said.

But predicting individual market sectors or the market at large is especially difficult these days Morgan Stanley strategist Teun Draaisma told The Guardian newspaper.

"We have less conviction than usual on the market direction outlook. None of the aspects that matter to us are giving us a clear steer, including ... sentiment, valuations and fundamentals."

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Wall Street analysts, many of whom get hefty bucks for their knowledgeable and hopefully right investment advice, were wrong big time last March.Among the more than a dozen companies who advised clients to buy European energy producers and U.S. pharmaceutical firms and sell...
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2009-25-24
Monday, 24 Aug 2009 12:25 PM
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