Asymco ranks analyst types and the accuracy of their market predictions:
In my years of watching those who watch markets I formed a ranking of analyst types and their likely accuracy with respect to prognosticating a market shift. In order from most accurate to least accurate:
- The most accurate are rank amateurs (Deagol, Muller, et. al). Independent bloggers who do some fact checking tend to make the boldest but most accurate forecasts.
- The next most accurate are sell-side analysts (purveyors of analyst reports from established brokerages). They follow financials for individual companies. You might think their record is quite poor, but in fact they are much better than …
- Industry analysts (like Gartner, IDC). Their forecasts and sensitivity to disruption are often off by an order of magnitude. This is partly because they forecast a bit further out than Wall St. but also because they are closer to their industry clients– the source of their ideas. They spend a lot of time talking to the least accurate forecasters …
- The corporate analysts. They are typically hired to advise management in the incumbent companies. These are people who have the most information about the way the industry is performing on a daily basis.
You might notice a pattern here: the closer you are to the market, the less likely you are to observe how that market is crumbling around you. You cannot see the forest for the trees.