Stardate 20010801.0723 (On Screen): There's a real problem with stock analysts at the big brokerages who trade in the stocks they monitor. The difficulty is one of a conflict of interest, because when one of these brokers announces a change in position, it can make that stock move. So the knee-jerk reaction is to make it so that analysts are not permitted to trade in the stocks they monitor.
Is this really all that much better? Do you really want to follow the advice of an analyst who isn't willing or able to invest his own money based on his advice? Perhaps another route could be followed here.
Right now SEC regulations require that all significant "insider" stock trades be published. I think the best answer would be to permit analysts to trade whatever they want with their own money, but to force them to reveal all trades concerning stocks they officially follow as analysts. Their votes with their wallets would be the most sincere analysis they'd be doing; if they issue a "strong buy" on a stock but sell their own holdings, it isn't too difficult to figure out their real opinion. (discuss)
