[aznshrek88]

Sorry, just wanted to rant, I'm doing a financial forecast for 3 years for EA, its a bitch....I hate financial statement analysis. Is this a normal class for undergrad? I'm trying to forecast 3 years of forward statements and its extremely interesting, but it fucking hard, I don't get where and how to justify my assumptions. Do analysts just bs their way through life?

[just4kickz]

lol im learning about neurons and its fucking hard and i dont want to be a neurologist.

[samwoo2go]

Originally Posted by aznshrek88

Do analysts just bs their way through life?

its interesting you asked that question, I remember 1 of my professor told me that someone did an experiment and let a chimp randomly picked out 10 stocks out of 100 random stocks and his returns are higher than half of the current "money managers"...so to answer your question... yes, i think FAs bullshit thru their life.

[aznshrek88]

Originally Posted by samwoo2go

its interesting you asked that question, I remember 1 of my professor told me that someone did an experiment and let a chimp randomly picked out 10 stocks out of 100 random stocks and his returns are higher than half of the current "money managers"...so to answer your question... yes, i think FAs bullshit thru their life.

My stats teacher told me the same thing. He also said that Cramer's portfoilio has underperformed the S&P Index for the last couple of years by around 20% too, which is interesting because he is considered the expert of experts on financial analysis. Also this year Berkshire finally reported a loss of 18%, which shows the godfather can't even beat the market right now.

[stooken]

Originally Posted by samwoo2go

its interesting you asked that question, I remember 1 of my professor told me that someone did an experiment and let a chimp randomly picked out 10 stocks out of 100 random stocks and his returns are higher than half of the current "money managers"...so to answer your question... yes, i think FAs bullshit thru their life.

i heard that too but i think the OP is touching on corporate finance and you're talking about the investment side of finance

forecasting data based on financial statements (revenue, costs, inventory and etc) can be pretty dead on using historical data. it doesn't fluctuate like the investment market does.

so to answer the OP's question, no, not all financial analysts BS their way through life.

[AndrewAZ]

Originally Posted by stooken

i heard that too but i think the OP is touching on corporate finance and you're talking about the investment side of finance

forecasting data based on financial statements (revenue, costs, inventory and etc) can be pretty dead on using historical data. it doesn't fluctuate like the investment market does.

so to answer the OP's question, no, not all financial analysts BS their way through life.

Yea maybe for a company with little growth such as coke or pepsi, or say Gillette that makes razor blades. You know something that has a relative very very stable demand and low to no growth in the market.

But for a company such as EA or Apple or MS its quite hard.

[AndrewAZ]

Originally Posted by aznshrek88

My stats teacher told me the same thing. He also said that Cramer's portfoilio has underperformed the S&P Index for the last couple of years by around 20% too, which is interesting because he is considered the expert of experts on financial analysis. Also this year Berkshire finally reported a loss of 18%, which shows the godfather can't even beat the market right now.

No one can.. Its pure statical luck for the folks who beat it over and over again and even then the odds go down as the years tick by.

80% of funds underperform compared to the market index and S&P.

This is why I stopped investing in funds or stocks and pick up the index in ETF's (You avoid paying someone to manage a fund which can take away management fees of a few %). If you have $10k or more and dont need it for 6+ years indexing in 5-6 areas of the market and reversion to the mean every 18 months is the way to go.. for me I keep adding money and probably wont need it for another 30-50 years.





Go read Swensens book. Its not an easy fun read but worth it. Hes a big fan of ETF's and indexing investing.

Among individual investors, David Swensen isn't a household name. But he is an icon in the world of big institutional money managers such as endowments and pension funds.

Mr. Swensen's fame comes from his oversight of Yale University's $15 billion endowment fund, which, since he was hired 20 years ago, has returned an average of 16% a year, far outpacing the market and other funds run for universities. Before arriving, Mr. Swensen had never overseen an institutional portfolio, and he brought to the job an unconventional approach for dividing up the portfolio among different asset classes. He is now Yale's chief investment officer.

Five years ago, Mr. Swensen set out to write a book that would bring the lessons he learned to individual investors. Instead, he says he found that the option most accessible to individuals -- mutual funds -- often makes it impossible to beat the market. And even when they do find good managers, individuals end up shooting themselves in the foot, he says.

[stooken]

Originally Posted by AndrewAZ

Yea maybe for a company with little growth such as coke or pepsi, or say Gillette that makes razor blades. You know something that has a relative very very stable demand and low to no growth in the market.

But for a company such as EA or Apple or MS its quite hard.

never said it was easy but it's not one of those pin the tail on the donkey blindfolded kind of jobs. theres alot of historical and statistical data you have to consider when forecasting.

i'm just saying that it's not something you can BS and make money like that chimp picking random stocks.

[jaiman]

Originally Posted by AndrewAZ

No one can.. Its pure statical luck for the folks who beat it over and over again and even then the odds go down as the years tick by.

80% of funds underperform compared to the market index and S&P.

This is why I stopped investing in funds or stocks and pick up the index in ETF's (You avoid paying someone to manage a fund which can take away management fees of a few %). If you have $10k or more and dont need it for 6+ years indexing in 5-6 areas of the market and reversion to the mean every 18 months is the way to go.. for me I keep adding money and probably wont need it for another 30-50 years.

Go read Swensens book. Its not an easy fun read but worth it. Hes a big fan of ETF's and indexing investing.

Among individual investors, David Swensen isn't a household name. But he is an icon in the world of big institutional money managers such as endowments and pension funds.

Mr. Swensen's fame comes from his oversight of Yale University's $15 billion endowment fund, which, since he was hired 20 years ago, has returned an average of 16% a year, far outpacing the market and other funds run for universities. Before arriving, Mr. Swensen had never overseen an institutional portfolio, and he brought to the job an unconventional approach for dividing up the portfolio among different asset classes. He is now Yale's chief investment officer.

Five years ago, Mr. Swensen set out to write a book that would bring the lessons he learned to individual investors. Instead, he says he found that the option most accessible to individuals -- mutual funds -- often makes it impossible to beat the market. And even when they do find good managers, individuals end up shooting themselves in the foot, he says.

You realize that the Cole's notes version of your post is "Anyone who beats the market is doing it off of luck. Now read this guys book cause he can beat the market" right?