Originally posted by monochrome Categoricall untrue: referring only to mediocre analysts.
Good analysts have worked in their covered industry and keep constantly current on industry events and trends through regular field contact - they're rarely "in the office." They either acquire financial skills (CFA) or have a team of junior skill partners. Good analysts write considered, supported OPINIONS based on personal observations. Mediocre analysts report what company management said on the conference call.
The trick is knowing which are the good analysts. They generally aren't employed by brokerages because brokerages don't pay the highest salaries.
The mediocre (and just lazy) industry analysts outnumber the good ones. In a lot of cases, 'mediocre' is good enough - sometimes some basic grunt work is all that's needed in industries that are not that complex. The problems arise when that same approach is used in the more nuanced, complex and changing industries.
The same strata of abilty applies directly to internal accounting, internal financial analysis and how that applies to product planning, cooperative partner strategies and competitive strategies. If the wrong bean-counters get a hold of the reins too tightly in a company that exists in one of those nuanced industries, it can mean near-disaster. Look at Apple prior to Job's rise back from the ashes, look at Dell now. (And maybe consider: Pentax )
On the other hand, a company that tries to exist on
vision alone and leaves the bean-counting and pragmatic analysis to the interns is usually going to be ending up in the dust-bin as well
.
.