For the first time since 1997, fewer than 29 percent of ratings for stocks covered by brokerage houses worldwide are “buys” according to data compiled by Bloomberg.
Although this statistic can seem pessimistic at first, we view it as a bullish sign. Our intent is not to discredit the brokerage houses’ work, but rather to point out that in the financial industry, consensus is practically never correct. Remember that analysts were collectively issuing recommendations to purchase tech stocks in 2000 and financials stocks in 2007…The consensus here will tend to have the immediate effect of reducing the quantity of buyers, which leads to overall market weakness.
Even if we do expect financial markets to remain turbulent and volatile in the short term, we are of the opinion that they will rebound within the upcoming year. We see this period as a great opportunity for investors to find bargains while waiting for analysts to change their mind…
