Beware Of “Buy”

By Ramesh Akkineni

Investors will do better if they can ignore all the “buy” recommendations of Analysts. As of Oct. 18,2001 all 15 analysts tracked by Thomson Financial/First Call rated Enron a "buy"--12 of the 15 called it a "strong buy." Even as late as Nov. 8, 2001 the date of Enron's disclosure that nearly five years of earnings would have to be recalculated, 11 of the 15 recommended buying the stock. (There were three "holds" and one "strong sell.") The company entered the biggest bankruptcy in U.S. history on Dec. 2, 2001. Thomson data showed nine of 15 analysts covering Enron kept buy or strong buy ratings until mid-November.

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