Savita Subramanian and the U.S. equity strategy team have noted that Wall Street analysts have been unusually bearish lately, a phenomenon that often precedes a massive rally in the market.
In other words, Subramanian is suggesting that the best move may be to do the exact opposite of what Wall Street is saying.
In a new note to clients, she offers even more evidence suggesting that analysts might not be worth what they’re getting paid for.
“Today, estimates may be lower quality than normal, given evidence of herding around consensus,” she wrote.
Chart 14 shows that the “dispersion of EPS estimates for S&P 500 companies is near all-time lows, likely reflecting an unwillingness of analysts to diverge from consensus amid macro uncertainty.”
Photo: Bank of America Merrill Lynch
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