Never Listen to the Rating Services…

Back when I was young and dumb, I used to take stock analysts at face value, thinking they knew what was up.

 

Then later on, once I started to know what I was doing, I realized that these guys were basically paid to have “biases” from their firms. I also realized that they were routinely “late to the ball game” when it came to upgrades and downgrades on stocks.

 

In fact, I’ve seen guys that, to make a point, bought when they said “sell” and sold when they said “buy” and they made money by taking the opposite of their advice. What’s up with that? These guys are paid to “talk a good talk” but in the end, don’t know how to make money trading/investing in stocks.

 

Well, I must say, I’ve added in a 2^nd rule in the last year. Never listen to the rating services (S&P, Moody’s & Fitch). These guys didn’t catch all of the crappy instruments that these banks, insurance companies and brokerages were holding back when these stocks were still flying and just now are they downgrading great companies because they got their hands slapped formerly for not taking action. Now they have moved to the other extreme and are downgrading everything that moves it seems.

 

Today, S&P downgraded 11 banks such as: Bank of America, Barclays, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase, Morgan Stanley, Royal Bank of Scotland, UBS and Wells Fargo.

 

Guys, these are the biggest banks that we have in the world. If they don’t make it, none are going to make it and we’re all in trouble. So this was a bit extreme.

 

Besides, have you looked at their stocks? Why are they telling us all of this closer to the bottom in their stocks? Why didn’t they “discover” all of these “revelations” a year ago?

 

I have to tell you, my “CD investing grandma” could pick stocks better than these guys and could warn you faster.

 

Maybe they ought to pay her hundreds of thousands of dollars a year to “talk a good talk” too. In fact, they’d trust a little old grandma a lot faster than they would these analysts. She could pull out some freshly baked cookies out of the oven and have you listen to her recommendations at the same time.

 

I must say, the final straw of the ratings agencies stooping so low was to reduce GE’s (General Electric) outlook to a “negative”. If one of the world’s biggest, most diversified companies can’t make it, we’ve got problems too.

 

There are a lot of companies I’d go picking on before I’d take a shot at GE. Com on guys!

 

To top it off, S&P even went so far as to “downgrade the whole country” when it came to banks in the U.S. and U.K. Don’t you think that the time to downgrade them would have been a year ago and not today? I do!

 

But maybe we’re just not as smart as all of these analysts. Ha-ha!

 

On top of this, you’d think that by their “timing” that they don’t even want stocks to recover. Besides that, they are telling us “now” what everyone knows. It’s like yesterday’s weather. Everybody already knows what it was. Do we really need to pay people for things we already know?!?

 

Don’t forget too that the government now owns positions in a lot of these companies. Want to ever see the return of your tax dollars at work? Then you’d better hope these securities go up in value as well whether you own stocks or not.

 

Bottom line: Get educated! No one will look after your money like you do, because you know how hard you worked for it. Most others could care less, unfortunately.

 

This is why I’d encourage you to check out our courses that will teach you everything from how to organize your personal finances, to stock market investing courses, to currency investing courses (after all, the dollar is starting to crash once again, and you need to know your alternatives).

 

So check us out at: http://www.mywealth.com/ and be sure to read our free blog in which you will get regular insights from our seasoned instructors.

 

Sean Hyman

Head Instructor