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Why is it bad form to research a company and then decide based on your findings to invest in it? (I am an outsider to the world of finance and clearly I am failing to understand something)



At a simple level, they are researching the company and then publishing their findings to convince others to invest in the company. Generally, the more demand there is for the shares, the more money the investment bank makes for conducting the share offering. So, the research arm has something of a (perceived, at least) motivation to publish research which supports a high level of demand.


Goldman Sachs Research in this instance is a defined term that carries a whole lot more weight than research you or I would do to determine if we should invest in a stock.

Analysts are required to genuinely believe what they are saying, or at least aren't allowed to say one thing in public research reports, and another in private. Their research is considered Material Non-Public Information until it is published, and thus cannot share it with anyone in their firm that is outside the research department until they release it to the public.




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