NEWS AND COMMENTARY
March 7, 2001
Bull Analyst Cohen Steering Investors Wrong Again
As we said yesterday, the Nasdaq is enjoying a rally that will eventually fizzle out -- this is a time to short stocks, not go long. Goldman's Abby Joseph Cohen, though, is seizing an opportunity to grab the media spotlight. Just because there's a glimmer of hope on Wall Street that stocks will rebound, Cohen wants everybody to add more stock positions. Well, investors lost money if they listened to her when she advised them to hold 65% in stocks, and they'll lose even more with 70% allocated to stocks -- if they have any money left!
With Cohen back in the media, it occurs to us that we've heard very little from former camera hogs and perpetual bull marketeers Henry Blodget of Merrill Lynch and Mary Meeker of Morgan Stanley. Blodget and Meeker became household names during the heady days of the bull market with regular appearances on CNBC and CNNfn. They championed tech stocks with gusto.
The trouble is, when the tech market collapsed, they continued to maintain buy ratings. And investors started to get angry. In Blodget's case, one investor, Debases Kanjilal of New York, alleges that the analyst maintained high ratings on doomed tech stocks for Merrill Lynch's and his own profit, not because the stock was a good investment. Today, most of his Blodget's stock picks are down about 75 percent from their highs. Kanjilal is out thousands of dollars, and he's hoping to recover his money in court.
The alleged indiscretion doesn't stop at Blodget either. According to SmartMoney.com, "well-known Internet guru Mary Meeker has come under fire for urging investors to keep buying technology and Internet stocks, even as the Nasdaq was tanking last year." And yet she STILL maintains out-perform ratings on 13 of the 17 stocks she covers. Here's a sample of her track record of "outperforming" stocks: As of March 2, Priceline is down 97.5%, Women.com is down 98.4%, Drugstore.com is down 97.8%, Amazon is down 87.9%, and the list of losers goes on.
The cloud of impropriety that surrounds these analysts should be a big eye opener to investors. We've been telling you for the better part of a year that brokerage firms use all kinds of tricks to get you to fork over your hard-earned money -- from outright scams to maintaining "buy" ratings on a loser investment. Both of these tricks can end up costing you a bundle, while analysts like Blodget and Meeker are ones who end up making a bundle.
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