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Fire Your Stock Analyst!: Analyzing Stocks On Your Own, Second Edition by Harry Domash

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4. Analysis Tool #1: Analyze Analysts’ Data

Tomorrow, or even next week, your stocks will move up or down, driven more by the winds of the market than fundamentals. But long-term, trading prices usually reflect the market’s earnings growth expectations for a stock. All else equal, you make money when expectations rise and lose money when they decline.

And who sets those expectations? Stock analysts.

Sure, analysts have come under fire time and time again for giving bad advice. They told us to buy ridiculously overpriced tech stocks when the market was in bubble territory in 1999 and 2000. In 2001, they urged us to buy Enron shortly before the energy trader collapsed. In 2007 and 2008, analysts were advising buying Fannie Mae, AIG, and oh so ...

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