Here's the Scoop: April 7, 2010
When I grow up, I have decided that I want to become an analyst. I’ll admit that I’m entirely sure what an analyst does, but that doesn’t seem to matter very much.
If you’re like me, you turn on the radio or TV and, at least once a week, you hear the announcer state something like: “Today’s unemployment figures showed that 35,000 jobs were gained this month. This figure was 18,000 higher than analysts’ expectations.”
This same sort of information occurs with reports on topics like “housing starts,” gross domestic product and the number of stupid comments uttered by Rush Limbaugh. In the latter case, the analysts’ predictions are always woefully low.
The analysts can be excused for underestimating the Limbaugh stupidity comments — some things can’t be controlled. But what about the rest of the figures that these folks are paid to study and then turn into useful insights?
Seems to me, these “experts” are more like men who drive without the aid of a Global Positioning Satellite — always off course. Which leads, naturally, to the question: Why bother having analysts if they are pretty much never right?
This is a good question, you may be thinking. I’ve heard there are currently hundreds of analysts trying to determine if eliminating analysts would make sense — but they can’t seem to agree on the response.
I guess the really good thing about being an analyst is that, unlike most professions, there’s a big safety net for being wrong. How many times do analysts’ errors get glossed over with a statement like: “Warmer than usual weather during the two days before Christmas resulted in no one buying winter coats, thus causing analysts to overestimate holiday shopping revenues.”
On the other hand, if the weather was a bit snowy, it’s a case of: “Holiday shopping numbers predicted by analysts were lower than expected because of the snowfall that kept customers away from the malls.”
As you can see, being an analyst rivals the job security of a funeral director — and without all that inconvenient evening work and somber music.
Not all bad
In defense of analysts, I know that when it comes to predicting the earnings of big corporations, sometimes the decision-makers underestimate revenue projections so they can “beat analysts’ expectations.” And please stock holders, naturally.
On those rare occasions when some type of financial prediction winds up “in line with analysts’ figures,” my guess is there’s no one more shocked than the analysts.
For the most part, though, analysts seem to be like Lucy holding the football for Charlie Brown to kick — you want to believe the sincerity, but you know what’s going to happen.
The reason these folks are on my mind is because I recently ran into someone who identified himself as analyst. He didn’t look weird or anything, so that was a good sign.
As I chatted with this fellow, he didn’t really fork over a lot “facts” about his job. The conversation felt like the scene in the movie “Office Space” where, with brutal honesty, the lead actor confesses that he really doesn’t do much during his time on the job.
We continued talking and I asked how this fellow got into the analytical field.
“Well, I was a meteorologist for a time — until I found out that people get really, really mad when your predictions are wrong,” he explained. “Being an analyst is a lot less pressure. And the bonus is — you can always blame the weather when you’re wrong!”