This is more to do with the accountability practice of brokerage firm. Analyst tends to behave as a horde as there is no risk being wrong when everyone other analyst is wrong. They don’t have stake in their recommendation and hence they are player “without-skin-in-the-game”. One should never ever trust guys with “without-skin-in-the-game” syndrome.
There are couple of more issues with the future predictions in stock market beautifully described in Howard Marks’ memo. Like most of the future predictions are nothing but past data extrapolation with suitably trimmed information to look it believable. Plus when the reports are available in open, there is very less chance of getting substantial profit out of it.
Hence as you said, the only way is to do your own homework, try to build the concept by reading books, and learn by looking/analyzing stock picking, buy/sell approach of the seniors who have skin-in-the-game and are known for the awesome skills in stock market.
Cloning is an interesting concept as outlined in this thread.
One of the interesting things that Mohnish brings up in the video about checklist investing is the the number of investments that he has made in the last four to five years. His number is just over thirty for an amount which according to him was around $200 million.
I think that a thing that can be cloned from his investment style is that the frequency of his investment is not more than 6 or 7 per year. This is not a lot for a person with those kind of funds. This also implies that once he is convinced about the idea, he really bets big as i am surmising that not all of the 30 bets had an equal allocation.
I came to know Mr. Parag Parikh (ppfas.com) about a year ago. I read his articles and seen videos of his interviews and classes. Was very impressed. Contemplated subscribing to their PMS but being a small investor didn’t have the corpus for the minimum investment amount criteria of 25 lacs. So, decided to clone by going through their various search reports published on moneycontrol. Should say have had reasonable success!
Chanced upon ValuePickr and am now trying to clone Hitesh. Invested in Unichem and Thangamayil.
Here you can select your favorite Hedge Fund managers. The website clones Hedge Funds by information available in public domain and few specialized algorithms. So far the Alpha Clone is able to beat the index funds.
May be good idea for new business. Any entrepreneurs?
I could not convince myself on cloning benefits. May be with experience and reading I can see merit. My POV below from 3 months of investing.
I play active chess. I can guarantee a quick lost game for black if black cloned whites move systematically. Because white is 1 move up as it starts first and after white checkmates black, black can’t clone further . Now it’s an analogy, but it captures the theme.
At best leads can be obtained for further research on fundamental and valuation.
Also role of PE is huge. BSE is full of brilliant PSU at 5 PE and loss making next big things at 50 PE. Better to avoid the extremes. Look for value, cycles, themes and earnings on solid predictable companies. May be reasonable return expectation is also important.
Every idea should be welcomed and should be processed for merit. Thorough investigation and due diligence is warranted for all your ideas regardless of the source. You should take buy or sell decision only after your own research and valuation. Else you lose heavily. The decision has to be your own because of the facts that you have discovered and internalized.
I have seen hat many top investors like to tom tom their stocks and the management. They want the stock to be discovered. I am not denying the fact that the promoters are not intelligent fanatics or business model of the stocks are not great (MOAT) etc. But you need to do your own valuation and research to verify.
