Most investors rely on their brokers for share tips, which a recent survey has shown could be a rather stupid thing to do.
Most investors rely on their brokers for share tips, which a recent survey has shown could be a rather stupid thing to do.
Thanks in part to the great uncertainty which has emerged out of the global financial crisis an increasing number of once-proud stock market pundits have thrown their hands in the air and cried: "we haven't got a clue what's going on".
That quote is obviously a somewhat liberal interpretation of the results of the survey by the Bloomberg news service of American analysts - but it's not far off the mark.
What Bloomberg found was that the number of straight-forward buy or sell tips had collapsed to be replaced by an avalanche of "hold" recommendations.
Whereas buy advice in 2002 accounted for 60 per cent of tips, and sells barely registered at less than 5 per cent (and holds filled the balance at around 35 per cent) today's call of the advisory card is buy tips at around 25 per cent, sells at 15 per cent, and holds at an astonishing 60 per cent..
There are many reasons for brokers retreating into the comfort zone of suggesting that a stock is a hold, even though no-one has ever successfully explained exactly what it means -- especially if you don't already own any of the stock you are being told to hold.
The Bloomberg survey was confined to U.S. brokers who have been particularly hard hit by the American and European malaise which has followed the GFC.
However, it reasonable to assume that it also applies to Australia as we always follow events on Wall Street, and local brokers will be mimicking the U.S. dash for "safety in obscurity" by not giving clear cut advice and falling back on that all-purpose escape word; hold.
The venerable Financial Times of London had a bit of fun last week with the uncertainty which has gripped analysts with a heading on its report of the survey reading: "It's a screaming hold".
Humour aside there is something disconcerting about people who are paid to advise hiding behind the "hold" word when what they're really trying to say is don't buy anything because we don't know which way the market will go next.
For investors there is a serious side to a situation when the people who claim to know what's happening admit that they haven't got a clue.
And it's in that clueless state which lies yet another reason for the rise-and-rise of gold, an investment class into which people have retreated for thousands of years.
Right now, as the tipsters flop about, gold will continue to perform well, driven by a fear of the unknown caused to a large degree by the promise of more paper money flooding the world financial system to encourage, of all things, inflation.
Once treated as the financial world's equivalent of cancer, inflation has suddenly emerged as the way to save the U.S. economy and, by inference, the rest of the world.
However, to say that encouraging inflation is a risky strategy is an understatement but it is a strategy in keeping with the times where hold and gold might even be interchangeable.
What the "hold-side" analysts are yet to concede is that their uncertainty is one step from a wholesale recommendation of buying gold, something that most of them have refused to do because of a belief in Lord Keynes' famous criticism of gold as "an historic relic".
Poor darlings. The analysts have spent so long pretending that gold has no place in a modern investment portfolio that suddenly they feel exposed by their ignorance and cannot quite go the extra step and shift they fingers one letter to the left on a qwerty keyboard where the g and h key sit side-by-side - replacing utterly meaningless hold tips with gold tips.
