AuthorTopic: Efficient Market Hypo is BS!
Collier
@2016-08-30 23:33:43
How'd you like that scathing Headline!?!?! ;-)

Anyone else explain to me why when BofA buys Fleet at .5553 shares per.. and BofA trading at $74.4, fleet trades at $39.67???

almost $2 off of where it should be, according to the terms of the buyout? And this is the current price, three days after the merger was announced..

How is their any rhyme or reason to the equity markets? It seems from this one small example, that the market is simply a random scattering of coin flips, and that the only reason Equity Research exists is to generate IB fees, and maybe some Equity Sales fees..

Geez..

javaman
@2016-09-12 16:15:07
Actually, equity research on the sell side has been explicity divided from the IB side. Sure, research can help generate fees and commisions on the institutional and retail sides, but nowhere near where the levels of revenue generated when research was used as a key part of IB deals.

Sell-side shops now see their equity research as cost centers rather than revenue centers, which is why analysts have been cut, and coverage vastly reduced. And really, this makes sense...if you're efforts aren't generating revenue, why are you there?

Ultimately, this is why sell-side research has been viewed skeptically, and why buy-side firms beefed up their internal research teams.

If you look at equity research on the buy-side, the value proposition is much different. The research people are there to support the portfolio management process - better research=better decisions=better performance=more assets under management.

CFA Discussion Topic: Efficient Market Hypo is BS!

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Edward Liu

Edward Liu