Securities analysts discredited by credit crunch?

February 9, 2009 | By Jim Kim

We've noted that there have been plenty of value-oriented mutual fund managers that have taken some huge lumps in the credit crisis. The likes of Bill Miller of Legg Mason and others, true to their philosophy, just kept on loading on financial stocks, as they tumbled, and tumbled, and then some more. The New York Times suggests that stock analysts may be guilty of similar slavishness to a value-oriented mindset.

There have been plenty of bad calls motivated by the idea that surely things can't get any worse. So have securities analysts once again been discredited? Well, no more so than hedge funds really. The fact is there were few people, save John Paulson and a few others, who saw this sort of financial meltdown coming. I think most people understand that analysts still pretty much have to rate most of their stocks buy.

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