Do Your Own Homework

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'I trust only those statistics I have manipulated myself’ is a quote often attributed to Sir Winston Churchill. When it comes investing, and speaking from experience, it is best to do your own homework. Wall Street is a business of selling information to people to get them to buy or sell something in order to generate a fee. While some research from Wall Street is very good, most of must be taken with a grain of salt. There is no definitive study that proves that Wall Street research is good, in fact, it is quite the opposite. Analysts tend to be overly bullish most of the time and then overly bearish when they should be bullish.^ They are just human beings after all. But don’t get us wrong, there are some good analysts out there. Further complicating this matter, the media gives you snippets generally showing pundits with opposing points of view. So how do you make sense of this noise, or know what to do or whom to trust? Well, the only way we know how to do this is by doing our own research. We trust ourselves. This is truly independent thinking.

^ Cusatis, Patrick, and Woolridge, J. Randall, "The Accuracy of Analysts' Long-Term Earnings-Per-Share Growth Rate Forecasts,” Press Release, Penn State Smeal School of Business, March 2008.