Beware the Broker BullS#!T!

Most of us are good at something. Perhaps even great at something.

For all the things we’re not so good at, there are plenty of experts out there that specialise in whatever obscure task we might need help with. This is particularly useful when there’s clearly a right way to do something, and a wrong way – I don’t think I’d be game to ‘have a go’ at rewiring my house or experimenting with the setup of the engine in my car.

But for many other things in life, including finance, things are a little more grey. Everyone has opinions, some even have techniques that seem to work really well for them.

Unfortunately most people want clear answers – like what stocks to buy – when there really isn’t a right or wrong answer. Yet we still search for experts to tell us what we want to hear.

And who are the industry experts when it comes to identifying the best stock investments?

If you’re answer is “Stock-brokers!”….then boy will this be an interesting post for you!

Broker Reports

If you haven’t seen a broker report before, they look something like this:

Some reports are brief, others have pages and pages of analysis, but they all usually have the same basics – stock recommendation, commentary and fancy analysis.

You can access certain broker reports through the ASX website – they issue a summary of new broker reports weekly if you sign up via email (see link here). Some companies also choose to put them on their websites as part of their resources for investors.

But the broker report above is one I found completely randomly on the internet by doing a quick Google search – one of the first reports that wasn’t for a mining or exploration company.

The company is Cash Converters (CCV), mostly known as a retailer of second-hand goods, but also a supplier of ‘financial products’ (mostly expensive short-term loans).

And much to my excitement, I discovered that Cash Converters has a whole heap of broker reports on their website dating all the way back to February 2010! (see link here)

What a wonderful opportunity this presents to do some analysis over the 8 year period, and use this as a real life example to discuss the usefulness of broker reports….…