"(Reuters) - The average stock investor could be forgiven for being overwhelmed by opinions, but one study says if there's one group to listen to, it's the short-sellers.
Professors at Texas and Ohio State universities concluded that following contrarian investors is more profitable for stocks in which analysts and short sellers strongly disagree.
In other words, buy if short interest is low and the analyst consensus is to sell; sell short if short interest is high and the analyst consensus is to buy.
"For the most part Wall Street analysts are just cheerleaders, so they kind of go with the flow and if the stock is trending higher they raise their price targets and say good things," said long-time short-seller Bill Fleckenstein, president of Fleckenstein Capital in Seattle, Washington.
"That is not to say that analysts are always wrong and the short sellers are always right. But at the margin if it gets pretty lopsided, I would go with the short sellers.""
http://www.reuters.com/article/2011/02/10/us-shortsellers-study-idUSTRE71973620110210
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