Analyst Downgrades Are Sometimes Silly (and very late)

Chesapeake Energy (CHK) stock has been going for almost a year now. Yes, there were some quick upturns but each one was met with a bigger sell off. See the stock chart below as well as my mark where the stock was finally downgraded by an analyst at Oppenheimer.
CHK downgradeSo it took one year of losses which saw the stock price go down about 55% before the analysts at Oppenheimer finally saw fit to downgrade the stock? Are you kidding me? That is just downright ridiculous and shows why I have less and less respect for analysts every day I am alive on this earth.

Then we have the story of why it is so hard for many brokerages to come out with honest downgrades and say bad things about some of the bigger and more popular public companies. Its all a game where no one wants to offend because if they do, they might lose future business with IPO’s and other business dealings within this incestuous industry. With all the different downgrade and upgrade terminology these brokerages use, it is very difficult to accurately understand what they are really saying much of the time.

Unfortunately many stocks make significant moves higher and lower on the backs of analysts changing their price targets or recommendations. People seem to give these analysts their blind trust even though they have probably never heard of them before. In the end, much of it is just a game designed make you feel that you need someones advice and to get you to trade often and be actively involved with your portfolio.

There are so many stocks, so many mutual funds, so many ETF’s, so many financial advisors, so many brokerages, and so many analysts that it can all be extremely confusing to any investor. You don’t have to be a beginner to start to wonder why there are so many talking mouths spouting out opinions everywhere you look. Its gotten tough to block out all the noise that bombards investors on a daily basis. Its gotten even harder to be able to sift through it all and figure out what is fluff and what it the good information that you should be paying attention to.