"Seemingly everyone, on both sides of the Atlantic, is now taking about recession. Even [Bank of England governor] Mervyn King.
"So why, asks SocGen’s James Montier in his latest issue of Mind Matters, is the investment research industry still predicting earnings growth of between 12 and 15 per cent?
"He’s got a chart to illustrate that analysts are exceptionally good at one thing and one thing alone - telling you what has just happened."
Memo to analysts: management havent got a clue. They dont know any better than the rest of us. One of the great delusions of our industry is that we all expect corporate managers to know more than we do. Whilst their knowledge may be deeper than ours, it certainly doesnt translate into a better ability to forecast the future…
It is this optimism that is being drip-fed to analysts, who, seemingly incapable of any form of independent thought, are happy to regurgitate managements mindless drivel to investors. This raises yet more questions as to why it is that we all employ so many analysts, if their major function is just to be a quasi-IR department for corporates.