‘Buy’ and ‘Sell’ make a comeback
TEXT OF STORY
SCOTT JAGOW: I’ll tell you flat-out, one of my pet peeves is business speak. In my world, a “pre-owned vehicle” is a used car. Phrases like “going forward” make my skin crawl. In the stock market, brokers use terms like “out-perform” and “overweight.” But brokerage giant Goldman Sachs said this week it’s going to cut out the jargon. Marketplace’s Amy Scott has more.
AMY SCOTT: Analysts at Goldman now have three simple choices when rating stocks: buy, neutral and sell.
A while back several Wall Street firms got in trouble for publishing biased or deceptive stock research. UC Davis finance professor Brad Barber says since then brokerages have been moving away from euphemisms.
BRAD BARBER: It just adds a level of translation that’s not necessary.
Some analysts still hesitate to call a spade a spade. When brokerage analyst Richard Bove likes a stock, he rates it a “buy.” But when delivering bad news, Bove prefers the more vague term “market perform.”
RICHARD BOVE: Let’s assume somebody owns a million shares of Goldman Sachs and you put a sell on it. And the market listens to what you say and the price of Goldman Sachs drops 4 or 5 percent that day. Well, the customer who owns the Goldman Sachs is likely to never pay you again.
Bove says he only works with sophisticated investors who understand the code. When it comes to mom and pop, he says simpler is probably better.
In New York, I’m Amy Scott for Marketplace.
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