ANALYST SHORTS MORE PROFITABLE THAN LONGS?

On popular demand we have published the results of our analysis on whether analysts are more accurate when they say SELL as compared to when they say BUY. At fourstocks.com , we have tracked the performance of thirteen analysts (brokerages & banks) starting from Sep 2008.

Here is a summary of the results:

• Of the total 500 picks tracked, 78% are long picks and 22% are short picks.
• While the accuracy of longs is 31%, the accuracy of shorts is 67%. Accuracy is defined as % of picks outperforming (underperforming) the index divided by total number of long (short) picks
  
• An average short pick outperforms the index (NIFTY) by 9.5% while an average long picks underperforms the index by 9.8%.
• The results are not vastly different if we consider only the best six performing analysts.
• While it is too small a time period to call these results statistically significant (something with reasonable predictive power), it does provide us with a pointer for something we need to look at closely in the future.
  

The original post also discusses the implications of these results and our theories on why this bias exists. Read the full post at blogs on fourstocks.com