Merrill Again

Now why would Merrill make their analysts put buy or sell signals on a certain percentage of stocks they cover. First of all, it makes no sense. During the height of the credit crises we just went through, there was no way a banking analyst could have had buy recommendations on 70 % of all the banks he covered. In the same sense, in a hot and growing sector like the agriculture sector maybe only 10% of stocks deserve to have a sell signal--yet now he must have 30% sell signals.

The word around the street is that by having more sell signals, it will cause more trading and therefore more commissions for Merrill and their brokers.

Way to go Merrill Lynch!

Good old Merrill

Merrill Lynch has done it again. They will now require all their analysis to rate at least 20% of the their companies they follow the equivalent of a sell recommendation. That is about four times the average. They will also limit the buy recommendations to 70% of the companies, while neutral rated stocks won't exceed 30%.

What if the stocks the analyst covers falls outside that guideline? Does the analyst then lie? Does he fudge the ratings? Why would Merrill do this? What is their underlying reason?

Tomorrow we will see.