If there is one group that is almost never bearish it is sell side analysts – you know the ones, those who almost never issue a sell recommendation. [Dec 5, 2007: The Games Analysts Play - Why Almost No One Says Sell] After all Wall Street sell side analysis is all about
making sure you never upset the company because you might lose business with them in the future advising clients on company prospects in an accurate way.
According to BofA Merrill Lynch, the sell side appears to be the most bearish it has been in 15 years. For the contrarians out there, that might be another near term positive.
The Sell Side Indicator is based on the average recommended equity allocation of Wall Street strategists as of the last business day of each month. We have found that Wall Street’s consensus equity allocation has historically been a reliable contrary indicator. In other words, it has historically been a bullish signal when Wall Street was extremely bearish, and vice versa. See our November report for more details on the Sell Side Indicator.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog