Bank Robbers…

If you’ve ever been stuck in an elevator with an investment banker you’ll be familiar with the concept of the analyst: someone who gets paid very well to agree with other analysts. Why? If one analyst recommends a bad stock they get fired. If they all do it no one gets fired; they blame the company whose stock it is.

Most analyst jobs are at the same banks who broker shares.  It’s in their interest to make you buy and sell stocks because the bank gets a commission each time. Consequently, most analysts are by nature “bullish” and full of bullisht. For the privilege of dodgy information you pay money managers a wad.

It doesn’t matter if the manager makes you money or not, they always manage to take a fee. Its a widely-known that most active fund managers under-perform the benchmarks they track because they buy and sell too often, losing money in broking commissions each time.

But let’s not glamorize the industry; analyst really means ‘looks at spread sheets,’ in much the same way that engineer means ‘fixes your dishwasher’.

Some analysts are ‘quants’, which means they look at even more spreadsheet models. Ironically, if you swap a couple of letters from quant you get a word more accurately describing many of them. ‘Quaint’ of course; many of them are quaint. Short for ‘quantitative’, and often short of charisma, quants are those who use Greek letters to avoid explaining something in English. Quants, like most men, want nothing more than a stable relationship with a model, regardless of whether the model is deeply flawed and lacking any real substance.

The dance between the big-wig portfolio managers, analysts and traders continues as the market ticks up and down day after day, with no one really understanding all that much about what is going on. Not that anyone needs to know what’s going on to pretend they know what’s going on. As long as they can convince investors then there will always be people eager to give away their money. That reminds me, I must call my broker.