What to make of sell-side financial analysts?

There have been a few signs that sell-side research is once again on the upswing. They seem to be beating back the independents, though the business model still seems a bit iffy. A Breakingviews opinionist is of the view that analysts have not been much help during the credit crunch. He notes that most are still recommending Fannie Mae and Freddie Mac. He also brings up AIG. "Their repeated, ludicrous sunny views should make any observer question whether analysts view their true constituency as investors--or the companies they cover." Ouch! I'm not sure what to think. Broad strokes like this are not usually wise. There were precious few on the sell-side who saw all this coming. But then again few people did, apart from those brave buy-siders who bet their farms on a plunge. Most people have lower expectations for the sell-side these days. They may have been slow to react, but so were a lot of hedge funds and mutual funds.

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