The Day Ahead: 'The Consensus' Is Laughing at Us
"The consensus": This not-so-readily-visible group of people is so important on the Street that, for many movers and shakers, their collective name rolls off the tongue as one syllable. Have you ever actually seen "the consensus" before? That fund manager who is pro-parking your hard-earned coin in an ETF and calling it a day -- is he or she "the consensus?" Or how about a random analyst at a two-person bucket shop in a Florida basement that happens to have a "note" run through the Yahoo! Finance news feed in front of a hotly anticipated earnings report? Is this individual "the consensus?" The answer to both of these is, "No."
I admit that I was once part of the clubby consensus, which I thought pretty neat, being a 20-something-year-old. There's nothing like slapping a sell rating on Wal-Mart (WMT) -- a late-2010 call -- and watching the stock drop a few points by 10 a.m. ET. It was better than injecting caffeine straight into the veins (not that I have done that). In any case, you have to be highly aware of a few things at this juncture. First, the consensus comprises Wall Street coverage analysts who, specifically for this earnings season, are firing off comments to the masses that say all is fine and dandy in corporate America. "Earnings are better than expected," I have heard. "European financial crisis is overblown," proclaimed another convicted jargon user and tree destroyer. "Companies are getting the job done" was a quote I read around midnight....509 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.
Already a Subscriber? Please login.