Financial Analysts Can be Wrong

Be careful when Wall Street analysts tell you how good or bad a bank or insurance company is, or when you ought to buy, or sell any of its securities.

Few Wall Street analysts are experts in the fields. I have recently commented about bank analysts. Today, I would like to point out that it’s impossible for an analyst to know much about an insurance company unless that analyst is conversant with the detailed reports filed by each insurance company with its state insurance regulatory authorities.

These reports delve into the individual insurance programs and reserves, details that have no resemblance to the balance sheets and profit and loss statements but have a direct bearing.

Unfortunately, few if any insurance analysts on Wall Street even know what they are, or what they are called. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)