research reports proven wrong

Just another topic of interest and why you should never INVEST on broker reports alone and more their crazy valuations and target price... As they have been proven wrong time and time again... And most case the sp has deprecated in value..

This paragraph was the last broker report on NMG from BBY..

Research Summary

"Noble Mineral Resources (NMG) has raised a further A$20M to make up for the funding shortfall needed to deliver Bibiani. We have updated our model with recent raisings, and adjusted our model in line with NMG’s projected capex spend (+ US$10M surplus to requirements).

Our production profile now reflects gold production from tailings until end May 2012, after which we begin processing Satellite ore, and we have raised our operating costs until Bibiani’s performance can be established. Finally, we lift the corporate tax rate to 35% (from our prev 30%) to reflect our view of Ghana’s likely tax regime. Our NPV has lowered to A$0.92/sh (prev A$1.25/sh), our new price target, which represents a 156% premium to the current share price. We retain our Strong Buy recommendation."

Strong buy really? I am astonished at how brokerage firms are still business or still have a client base!!

I learned a very valuable lesson many many years ago when it comes to research reports... Don't believe it or get sucked into it!!

My advice is simple it is up to YOU to do as much of your own research as possible.. You have to take into account many things like..

1- Is the stock you are looking to invest in, is that sector as a whole bearish or bullish at the moment?

2- Political risks to the company as to which country they are operating out of?

3- Balance sheets, revenue guidance P/E ratios vs sector ratios

4- Quality of management & board, researching history on current management... Incl media articles

5- General opinions of the company on forums (this should be taken with a grain of salt and need to extract what is good info to possible misleading info)

Remember it's up to DYOR