Market Ethos - October 23rd, 2017

When is a sell really a buy

 

While it may feel better to invest in a company that has 8 analyst buy ratings relative to a company that has 2 buys, 5 holds and a sell, but you may be suffering from a behavioral bias. There is less regret by investing in the company all the analysts like and there is more comfort in being part of a herd. However, companies with fewer buy ratings often perform better than those with more buy ratings. In this edition we explore why this is the case and share the foundation of a trading strategy we have been developing based on these findings.