I have not used financial planners and stock analysts, mainly because I treat investing as an interesting hobby, and hence the “interesting” facet of the process would be lost if I outsourced the investment process. Also, the ethics and knowledge of financial planners and analysts is a worry.
A fellow B'Com graduate of my age group who reported to me in the 1960s when I functioned as an export consultant in Johannesburg, resigned and jointed a firm of stock brokers, or something of that ilk. I did not think he had the skills and aptitude for his role, but when he mentioned that Hex River Textiles was a good investment, and that Jim Slater had invested in it, I took a small punt. The SP soon collapsed. In 1970 a fellow MBA student whose family were the significant shareholders of a then-recently-floated company in the liquour-distribution game, and he extolled its worth. I took a small punt on that too, which also cost me money. These two experiences served to strengthen my preference for the do-your-own-research approach to investing.
UPDATE 2.15pm: Shares in engineering and construction group Monadelphous have been on a flier over the past six weeks, but Morgan Stanley is warning of a reversal.
At $11.39 at the close, up 47¢, or 4.3 per cent, on the day, Monadelphous shares are trading at double Morgan Stanley’s 12-month price target of $5.57 and well above Bloomberg’s consensus target of $6.37.
The stock’s gain from $7.09 on June 28 is consistent with the improved investor sentiment around the resources services industry.
However, Morgan Stanley is calling a retreat over the next two months, saying the jump has not been supported by “any positive catalysts or .... any substantial change in deteriorating industry fundamentals”.
“We expect the shares to de-rate into the FY16 result (due on August 23),” it said.
Morgan Stanley has an underweight recommendation on Monadelphous.
According to Bloomberg, seven of 14 analysts covering the stock have it has a sell, with the balance rating it a hold.
MND Price at posting:
$19.48 Sentiment: Hold Disclosure: Held
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