A Cognitive Crisis
Manipulation has been the name of the game in capital markets, a key reason why I have stayed clear of them the last several years.
I blame the market manoeuvring entirely on the analyst community – and I have no reason to believe that non-alignment, independence and integrity are values they subscribe to.
I happened to read some interesting reports today in CNBC and one of them was Social Capital founder Chamath Palihapitiya saying “IBM Watson is a joke.” I had not heard about the company earlier, so I do not wish to go into any motivation behind such an analysis from the Social Capital CEO.
I do think they were harsh words, prompting IBM to immediately contest the charge.
Palihapitiya, however, had something positive to say about CEOs Elon Musk of Tesla and Jeff Bezos of Amazon. His prescription for investors: “When it comes to investing in tech companies, people should bet on the CEOs, rather than the company’s business model.”
Cisco Downgrade and Upgrade
Another report that amused me was the one relating to the downgrade of Cisco Systems by BMO Capital Markets, another company I had not heard of. The reason it drummed up: “Cisco’s struggling router business.”
Funnily, the downgrade comes in the wake of a double upgrade that Cisco received from Credit Suisse just two weeks ago.
At least Credit Suisse had a compelling reason to do so – that Cisco was one of the companies that can be expected to repatriate back to the U.S. some of their funds parked overseas.
UBS estimates that S&P 500 companies hold about $2.4 trillion in unrepatriated profits and more than $1 trillion cash overseas. Not surprisingly, UBS is firm that “repatriation stocks” are worth a buy.
I doubt the wheeling-dealing analysts are worth paying attention to. It is time for investors to give them a triple downgrade. Watson being a joke can be debatable but whatever cognitive ability analysts apply to their prescriptions is suspect.
G Joslin Vethakumar