Xiang Ji's Bookshelf » Korean Development Bank http://www.xiangji.org You Don't Need To Innovate In Finance; You Don't Need To Invent Anything New Fri, 19 Nov 2010 16:31:23 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Rumor Or Hammer? The Market Will Tell http://www.xiangji.org/2008/08/22/rumor-or-hammer-the-market-will-tell/ http://www.xiangji.org/2008/08/22/rumor-or-hammer-the-market-will-tell/#comments Sat, 23 Aug 2008 03:04:27 +0000 Xiang Ji http://www.xiangji.org/?p=163 At 1pm on Thursday, Ladenburg analyst Dick Bove sent out a note on Lehman Brothers to raise the stock to a Buy, basing his belief that a hostile takeover is now possible. Within less than a hour, Lehman’s stock rose from $12.91 to $13.54. With the lightening speed of the market, there is no time to read through Bove’s full report. Only the message is important: buy Lehman.

FT Alphaville points out that the analyst’s past record on stock picking isn’t promising. But that will not matter. An influential analyst will move markets, like it or not.


(REUTERS/Brendan McDermid)

But the market is no fool. Today Lehman’s stock is trading above $15, after news get out on a possible buyout of the struggling investment firm by a Korean bank or some sorts (various media reports including DealZone identified different potential buyers).

So Bove’s speculative note had a $0.63 market movement, while a more substantial news with names of possible buyers and spokesperson’s verification moved the price up $2.00. There is no need to lament an analyst’s poor rating records. The market knows who and what to follow the best.

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