When I search for stocks depending on analysts ratings, I see alot of differences for the same stock, ranging from strong sell to strong buy.

Are all the analysts the same, or some are more trusted than others, and how can I know?

2 Answers 2


Every analyst has his own criterion, depending on the theories he has studied and depending on his experience. Analyst are trusted depending on the veracity of their statments.

However, supposing you are asking about analysis techniques instead of analysts, there are two main paradigms on how to do financial analysis, fundamental and technical analysis. In summary, fundamental analysis says that a stock evolution depends on the variables that affect the profit of the business, goverment, or other institution which the stock is a liability. Technical analysis is based on apply ratios and graphs to the asset price and try to compare it to some patterns.

As a economist, I trust better fundamental analysis, however this works better on a long term when you have the data and the possible tends to an equilibrium are satisfied. On a short term, technical analysis could be preferable, also for people without knowledge on economics or on the field related to the asset, technical analysis could be better.

Answering if one technique is better to another is a complex question and depends on the context of the stock, on the volatility and on the trend clarity. Indicators works with comparation to past events, so they are most trustworthy the most similar is the evolution of the stock to a past event.

Here I found for you a list of some of them:



Are all the analysts the same,

No. You can find analysts using almost any imaginable method and with almost any imaginable track record.

or some are more trusted than others, and how can I know?

There is really no standardized, reliable ranking of analysts (although you should disregard advice from analysts who don't have some kind of federal licensing in the securities industry, which is often a yellow flag that someone might be a fraud).

You can look at other advice that they have rendered and the methods that they use and determine if you trust them. You can also look at the historic performance of people who followed their recommendations.

As a caveat to that, some analysts will tout that people who followed their advice (often in a particular year) did extremely well relative to the market. Keep in mind that in any given year, somebody has to produce the best results, the second best results, and so on.

Many of the top performing recommendations in any given year are flukes that weren't true in the past and aren't true in the future, for example, because some stock that an analyst recommended (not necessarily for the right reasons) just happened to profoundly over perform expectations and few people saw that coming.

Most top performers in any given year regress to the mean of mediocre performance a bit below that of indexes for the market where they are making recommendations within a few years of their peak year.

Unless someone consistently performs well above the relevant indexes for many years in a row, you shouldn't give excessive credit to someone just because they got lucky in one year.

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