The Performance Of Popular Investment Magazine Stock Analysts

Abstract

This study examines the stock price performance for a sample of 239 firms that were recommended by analysts in popular investment magazines (214 buy and 25 sell recommendations). The study was motivated by the magazines claims that abnormal profits can be earned by following the investment advice published in their respective magazines. The empirical results are not consistent with this claim. For our sample and during the time period investigated, investing in the buy recommendations and selling short the sell recommendations would not earn returns in excess of the market average.