SHARETIPSINFO >> Articles Directory >>Stock Ratings: The Good, The Bad And The Ugly
Stock ratings are valuable piece of information that indicates the potential of that particular stock in the stock market. The stock ratings are prepared by the professional stock market analyst on the basis of the fundamental and technical analysis of the stocks. There are so many factors that are judged by the analysts to derive at the ratings of the stocks. The stock ratings might be different from one analyst to the other depending on the perspective of the analysts. But grossly the result of most of the analysis and stock ratings are similar and indicate more or less the same price movement of the stocks.
From an investors point of view the stock ratings prepared by the expert analysts are vital piece of information. There are huge numbers of investors who rely on the stock ratings for taking trading decisions. But as investors you must realize that perspective of each investor at stock market is unique and hence it is not wise to blindly follow the stock ratings. Simply because the objective of stock market investment and risk tolerance is different from one investor to the other. So the stock rating that suit one investor might not suit the other. So while considering the stock ratings you must always compare the ratings with your trading pattern, fund, risk tolerance and other factors.
Technically all the stock ratings are derived at after calculating the data collected from the market, the ratings are prepared by professionals through tested procedures and with the help of different tools. So it is quite evident that the stock ratings should project the best possible picture regarding the future of the stocks. But in reality this is not true always. There are some factors that become instrumental in preparing the stock ratings and hence the stock ratings these days differ greatly in terms of quality. This is why we can easily categorize the stocks ratings depending on the quality of the ratings. Here we are providing you an insight of the stock ratings that are divided in three different groups – The Good, the Bad and the Ugly – that will help you to a great extent when it comes to depending on stock ratings and taking trading decisions on the basis of the stock ratings.
The Good Stock Ratings – There are certain stock ratings that are methodically prepared maintaining all the parameters. Generally the ratings of this category are derived at after lengthy and time taking calculations that are done by the experts. The result is of course the identical movement of the stocks as per the stock ratings in the future. From an investors point of view these stock ratings are the safest ratings to follow as the price movement of the stocks is identical to the predictions made by the analysts. So if you are investing according to the good stock ratings, it is most likely that you will get good return in the future from your stock market investment.
The Bad Stock Ratings – There are at times when stock market ratings become greatly dependent to some factors that are not predictable when the ratings were prepared. Factors like the business policy of the company, management of the company, market scenario, and overall impact of the economy on the stock – greatly affect these stock ratings. As these factors are not constant and keep changing from time to time – the fate of the stock ratings also remains dynamic. So it can be said that these stock ratings are time bound and might not hold good at point of times. So as an investor you can not blindly follow the buy, sell or hold decisions of these stock ratings. Rather you should be careful and consider all the relevant factors before following these ratings.
The Ugly Stock Ratings – There are some stock ratings that are not really prepared by the analysts or in some cases prepared under influence of some bias. There are unscrupulous people who tend to influence the ratings with the aim of triggering sales and manipulating the price movement of the stocks. These are the stock ratings that are most dangerous for the investors and can actually ruin your potential for earning from stock market.
But you must always remember that not all the analysts are dishonest and there are certainly stock ratings that you can depend on.
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