Analysts

What does it take to be an analyst?

It doesn’t seem like the expectations for job performance are very high.  Analysts are frequently wrong, and frequently disagree with each other.  It seems like you can say whatever you want, and get away with it.

What got me thinking about this is this statement by Rick Sherlund, an analyst for Goldman Sachs: 

“With Sony likely delivering enough consoles to meet demand by the June quarter,” he explains, “this would seem to be an appropriate time for Microsoft to move down the price curve and benefit from the elasticity of demand.”

Of course Sony is already meeting demand in North America and Japan, and has been for a while now.  This makes me wonder about the rest of the analyst predictions:  HDMI and a bigger hard disk.  These are pretty safe guesses.

I’m not meaning to pick on Rick Sherlund, but he’s the name on this report so I Googled for him.  TheStreet.com did a report on analysts and has him listed as a reliable source.  They’ve even got a Rick Sherlund stock pick: Amdocs Ltd.

That’s an easy thing to check on.  How would you have fared if you’d bought Amdocs on 2000 as Rick recommended?  Check the chart (click on 10y).  A little scary considering he’s leaving Goldman Sachs to work as an investor:

Perennial top-ranked Microsoft analyst Rick Sherlund is leaving Goldman Sachs to perhaps work as an investor. He may start a hedge fund but first he wants to work on the buy-side, according to a Wall Street Journal story that broke the news Saturday.

Here’s another analyst, Colin Sebastian, predicting that Microsoft will miss it’s 2006 sales target, shipping less than 6 million by the end of 2006.  Whoops. 

These predictions don’t seem that difficult to make, it must be a lot of fun to spend your days speculating about where the industry is going.  And if you get it wrong, hey, it’s just part of the job.

I wonder if it pays well.