Why City analysts get it wrong so often

Phil Oakley explains why you should always take City analysts' views with a pinch of salt, and do your own research before buying any stock.

The City employs hundreds of analysts who spend their days studying companies and telling people what to do with their shares. Yet countless studies show that they have a terrible track record of predicting the future.

Indeed, most evidence shows that most analysts simply extrapolate what has happened in the past into the future (so if a company's earnings are rising, they'll expect them to continue to rise), rather than accurately spotting turning points.

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Phil spent 13 years as an investment analyst for both stockbroking and fund management companies.

 

After graduating with a MSc in International Banking, Economics & Finance from Liverpool Business School in 1996, Phil went to work for BWD Rensburg, a Liverpool based investment manager. In 2001, he joined ABN AMRO as a transport analyst. After a brief spell as a food retail analyst, he spent five years with ABN's very successful UK Smaller Companies team where he covered engineering, transport and support services stocks.

 

In 2007, Phil joined Halbis Capital Management as a European equities analyst. He began writing for MoneyWeek in 2010.