Let's Talk Stocks

[84porsche]

Since the knowledge of this board has been reliable in the past, I must inquire into the trust again for learning more about stocks.

What is/are upgrades/downgrades? What does this mean? And what weight if anything should this have on holding a stock or selling a stock?

For example:

10-Jan-06 Kaufman Bros Initiated Buy
9-Jan-06 JP Morgan Initiated Overweight
23-Dec-05 Soleil Initiated Hold
1-Dec-05 WR Hambrecht Initiated Buy
27-Sep-05 Morgan Joseph Initiated Buy
31-Aug-05 Robert W. Baird Initiated Outperform
25-Feb-05 Moors & Cabot Initiated Buy
25-Jan-05 Thomas Weisel Upgrade Peer Perform Outperform
17-Aug-04 CIBC Wrld Mkts Initiated Sector Perform
10-Aug-04 Thomas Weisel Initiated Peer Perform
27-May-04 Schwab Soundview Initiated Outperform
25-May-04 Piper Jaffray Initiated Outperform

[HardDrive]

It means that the 'experts' are expressing their view on what the future of the stock holds. I would suggest totally ignoring them.

[Nathans_Dad]

Upgrades and downgrades are simply changes in the sentiment towards the stock that a specific analyst has. For example, if Lehman Brothers upgrades to a buy from a hold, that means the analyst is more bullish on the stock. There are various terms that different investment houses use, buy/hold/sell, outperform/market perform/underperform, overweight/hold/underweight, etc.

Whether or not you should pay attention to upgrades or downgrades is up for debate a little. Certainly if all the analysts are negative on a stock you should think twice about buying and try and figure out why they might be so negative. But remember that analysts are people too and that rating is just based on what that analyst thinks.

There are some folks out there who think it is all a racket. Example, Analyst downgrades Stock XYZ, stock drops. Analyst's company or other companies buy the stock on the drop. Analyst then upgrades the stock later on, stock rises, analyst's company sells stock. This is illegal, but sometimes proving it is tough.

I have personally noticed that upgrades and downgrades are often times after the fact and sometimes represent good buying opportunities. Analysts are like sheep, they all follow the herd. If nothing about the company has changed then a downgrade might be a good time to buy.

Caveat emptor.

[911skb]

One thing I keep in mind when reading these upgrades/downgrades and any other media comments about stocks, is that the major holders of stocks; mutual funds, pension plans, etc, all take a tremendous effort to change their position in a particular stock. Kinda like turning the mega-size cargo ship, takes careful planning and executed over time. Individual investors can be in and out of their tiny position in a heart beat, with no impact to the market.

Having said that, I would assume that by the time the avg. Joe on the street (meaning most of us) hears about these down grades/upgrades, recommendations, etc, the true players on the Street have already made their move and are into or out of the position they want to be at. So, it isn't that they are baiting others to buy the dog they are selling, but they for sure have already bought (or sold, or shorted, etc) the stock they are now commenting on. So they do have a benefit to any upside there.

If a majority of the analysts' opinion is contrary to mine, I at least research why and weigh that against the fundamentals that made me interested in the stock.

I know this because I'm very accomplished at losing money in the market!