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In Praise Of Conflicted Stock Analysts

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Many stock analysts are prohibited from owning shares in the companies they cover. The idea is that owning stocks they recommend could be a conflict of interest, making their analysis subject to criticism as stock touting and market manipulation rather than disinterested analysis.
But do we really want "disinterested" analysts? Wouldn't disclosure of positions be enough to allow investors to make informed decisions about whether or not to trust an analysts recommendations? Paul Kedrosky this morning argues that we shouldn't trust anyone who isn't convinced enough of their own position to buy or short the stocks they cover.

I say these people with no conflicts shouldn't be trusted. How am I to take seriously someone in the financial services business who tell people to own a stock, but doesn't own it themselves? They have no skin in the game, and in a business entirely built around wealth creation, self-interest and greed, that makes me suspicious. Granted, I don't want them self-dealing, but I do want to know that their interests are directly aligned with mine.

Should Analysts Who Don't Own Stocks Be Trusted? [Infectious Greed]