When I watch you eagerly tear open your Banker & Tradesman each week, I know what page you’re turning to. Thank you.
That’s why I’m so disturbed by irresponsible research released this month suggesting that stock tips by an analysts have little or no effect on stock prices.
I’m not a stock analyst, but we columnists, who are blessed with the ability to get people to do what we tell them, can’t be besmirched by any Wall Street frailties, real or imagined.
The research from professors at the University of Pittsburgh and Tulane University looked at stock prices 20 minutes before and 20 minutes after a recommendation was issued – a time frame we columnists call long-term thinking. The professors concluded that the analysts’ recommendations don’t have very much to offer – and the investors know it.
That’s how I knew I was safe. Who told you to buy not-so-common, very-closely-held, much-preferred stock in The Warren Group, the shadowy Cayman Islands holding company that owns this newspaper? The recommendation came from Cohen, based on the “Cohen Effect;” that is, the elevation of Cohen to columnist from second-tier file clerk.
And who was it that recommended you stock up on cigarettes, so you could stand around drug stores and university convenience stores, selling Evil Demon tobacco, now that Boston banned the stores from selling what people want to buy?
The professors who trashed the stock analysts conceded that previous studies had found large movements in stock prices after recommendations, but they attributed the changes to news that was reported by the companies – not the analysts.
I must confess that on occasion, when I’m not making up stuff so the column comes out all right, I do make recommendations based on what is purported to be “news.” The difference is, my recommendations move intellectual and political mountains, quite aside from those “facts” that some people apparently think are so important.
Was it not Cohen who made you rich, recommending that you invest in area funeral homes, in response to the formation of the state’s high-tech, Information Technology Collaborative, on the theory that the name alone would be sufficient to bore people to death, even before they began collaborating?
Was it not Cohen who pointed you toward counterintuitive enthusiasm about the Massachusetts economy, based on the Boston Chamber of Commerce gloom about Massachusetts having the lowest growth in the nation in the number of workers with a bachelor’s degree? The Cohen take: fewer English literature majors means more productive people who don’t grow up to be newspaper columnists or similar low-wage occupations.
Light News
One of the complaints about analysts in the academic study was that the recommendations were “typically information-free,” as one of the professors put it. It might just seem that way. For instance, when Cohen recommended that you invest in psychiatric hospitals, the advice might have seemed information-free, but, in fact, it was based on a recent Massachusetts Supreme Judicial Court decision ordering cops to stop frisking suspected drug dealers for weapons, unless the cops say “please” first and have very, very concrete reasons to believe that the bad guy is carrying a gun or a law book. The Cohen take: the high court justices already need psychiatric care – and the cops will join them shortly, based on that ruling.
And was it not Cohen who recommended that you dip into your savings to fund vegetarian coffee houses featuring poetry readings and dance troupes, in anticipation of the National Endowment for the Arts report last year revealing that Massachusetts has the third-highest percentage of artists in the country?
These Cohen forecasts move markets, professors be damned. When I forecast in the 1990s that the stock of U.S. Rep. Richard Neal from Springfield would rise, as folks discovered that he was in the safest Congressional district this side of Pluto, you responded. No one has run against him since 1996 and his campaign contributions have soared – because everyone wants to invest in an asset that’s as safe as a C.D., but continues to increase pork-project revenue.
So, don’t let a couple of dreamy professors try to tell you that analysts don’t make much difference. Many of us, especially the ink-stained columnists, make the world go round.
