Wall Street’s big casinos are still setting the odds for America’s stock market gamblers, always have, always will. The game’s fixed. And while hot-shot analysts like Morgan Stanley’s Mary Meeker, Merrill Lynch’s Henry Blodget and Goldman’s Jack Grubman are history, a new crop has replaced them, in the service of Wall Street’s power players—they’re just salesmen. Analysts still favor ‘buy signals’ more than 90% of the time. But most of all, analysts favor Wall Street insiders, the guys they work for, the people who sign their paychecks, it’s just human nature. What’d you expect, an unbiased opinion? Never happen, underneath their independent façade, analysts are salesmen, helping the boss make a deal. Period.
Contrarian indicators fascinate me, ever since I published one back in the early nineties. But they fascinate me not for the reasons you’d expect, not because they are technical signals of turning points in the market. Contrarian indicators are fascinating because they tell us a lot about the irrational brains of Wall Street’s insiders, strategists, analysts, gurus and pundits, as well as average Main Street investors. Yes, those guys are geniuses, but according to the Ned Davis Research publisher of some of America’s best contrarian indicators, Wall Street strategists actually aren’t very good at predicting the market. Worse, they’re usually wrong at the major turning points, the tops and bottoms. (More)