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Chapter 11. Snakes and Ladders: Spinning... > Red Flag 3: When an Analyst’s Estima...

Red Flag 3: When an Analyst’s Estimates and Recommendations Often Don’t Pan Out

If you are going to follow the advice of analysts, you have to get to know whether their earnings estimates and recommendations pan out or not and what potential conflicts of interest they may face within their investment bank or brokerage. This is a lot to ask of any retail investor, but without doing your own research, you could easily end up chasing the picks of the next Jack Grubman into bankruptcy hell. One way of getting an indication of who is hot and who is definitely not among brokerage analysts is to read www.starmine.com, a web service that provides independent ratings of Wall Street securities analysts by measuring them on their stock-picking performance and the accuracy of their earnings forecasts.


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