JMF Capstone Wealth ManagementAnalysts’ Disappearing Edge – JMF Capstone Wealth Management https://www.jmfcapstone.com An Alabama registered investment advisor Fri, 21 Nov 2025 19:30:19 +0000 en-US hourly 1 https://wordpress.org/?v=5.1.22 Analysts’ Disappearing Edge https://www.jmfcapstone.com/2016/06/20/analysts-disappearing-edge/ https://www.jmfcapstone.com/2016/06/20/analysts-disappearing-edge/#respond Mon, 20 Jun 2016 09:00:31 +0000 http://evolvemypractice.com/?p=2882 A long-standing anomaly for efficient markets has been what’s called “post-revision return drift” (PRD). Research into stock returns has found that changes in sell-side analyst recommendations for buying and selling stocks predict future long-term returns in the same direction as the change. Upgrades are followed by positive returns, and downgrades are followed by negative returns....

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]]> A long-standing anomaly for efficient markets has been what’s called “post-revision return drift” (PRD). Research into stock returns has found that changes in sell-side analyst recommendations for buying and selling stocks predict future long-term returns in the same direction as the change. Upgrades are followed by positive returns, and downgrades are followed by negative returns.

To explain the anomaly, it’s been hypothesized that securities analysts are better informed and more skillful than the investing public in general. In addition, PRD persists because investors typically underreact to analysts, responding only partly upon their revision announcements and slowly thereafter, perhaps taking months.

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