The Smartest People on the Street

Goldman Sachs is a pretty massive bank. They all are. JP Morgan, the list goes on. They do a lot of financial things. They all have large analyst teams that cover everything across global markets. Stocks, bonds, crazy derivative products only a few of us can understand.

The kind that bring down an entire global financial system. This joke never gets old.

These banks and their analyst teams are clearly good at their jobs. They’ve managed to keep money flowing in. They are even better at getting press and attention from everyone whenever they do something. Especially mainstream media networks. Somehow they continue to move markets with their research. I don’t know how they do it, but it happens over and over.

Wall Street analyst downgrades a stock, stock tumbles. Upgrade a stock, stock rises. Rinse and repeat.


*In a massive boardroom on the 488th floor, walls lined with gold, bankers and analysts sit in giant leather chairs with New York City skyscrapers floating behind them in the windows.*

One of them reaches for a phone and turns on the conference line. A number is dialed. It rings. It’s answered.

“You won’t believe what our analyst team researched about a stock today! Whoa baby! Get ready for big news! We moved our price target down.”

*In a bustling media Room with TVs, webpages, and headlines open from around the world a team waits for news.*

One team member ,who writes headlines, answers a ringing phone.

“Hello… Wow! Did you say “Downgrade”!? Ground breaking. Can you come on TV and talk about it in 30 minutes? “

*Scene cuts back to the boardroom…*

Image result for mr burns laugh

I await the day this cycle finally ends.

Philip Elmer-DeWitt is probably the greatest Apple analyst alive today. And he works for no bank. Have you heard of him?

He’s a blogger. He has followed Apple his entire career from a perspective only a few can relate to – the Internet, bloggers, underground communities, hyper focused groups of people, connecting online at any location in the world.

Spend 20 minutes exploring his blog, community, and the data he has crafted about Apple. It’s truly next level. He might be the smartest Apple analyst on the street. Yep, a blogger.

I am going to let you in a on secret… in 15 years, this is how all the best thinkers and leaders of any one industry or company or business will do it. They will run their own ship. They will have their own community. It won’t be centralized to a bank or anything of that sort. It will revolve around the person, the face, with actual skin in the game.

Some of you know Ben Thompson and Stratechery. He has changed the game for strategy in tech and how it’s delivered to anyone, anywhere. I wonder if, in certain circles of tech, he’s valued higher over even the biggest consulting houses.

Shane Parrish has changed the game for how people think and leverage their own wisdom. He has 170,000 followers on Twitter. He has almost 300,000 subscribers to his newsletter.

The other day, while looking at some Apple data, I was shown a unique chart showing the team at Goldman Sachs and their predictions for Apple’s stock price over the last year. What you will see on this chart is two lines – a red line showing Goldman’s price target and a dotted line showing Apple’s actual share price at a given moment in time.

You probably could have built a trading system that took the opposite of the analyst’s predictions and made some nice coin. Like printing cash. But what’s really mind-boggling about all of this is that the analyst team changed their price target more than 10 times in about 12 months. Who does that besides day traders playing with 3x leveraged ETFs? We’re talking about a company that has a market cap of $950 billion today and can generate revenue of $50+ billion in just three summer months. I’m not sure how anyone could have more than 10 different price targets on a company of that size in such a short amount of time.

But yes, Goldman f’ing Sachs sold that to all of you.

This is the shift. The institutional trust and clout previous generations have come to know will fade. And as it fades, the acceleration of diverse opinions will increase. More and more people have a voice and presence online. More and more people can share their own research. This all feeds into a bigger and better idea meritocracy. A place where the best and most dedicated to any one subject, even if they are bloggers, will rise to the top despite any non-traditional background or affiliation with a corporate name.

These will be the new smartest people on the street.


Thanks for reading. Remember to follow me on Twitter and StockTwits. Also, you have to sign-up for my email newsletter.

If you missed it, I wrote about something similar to this called, Then and Now. On the slow grind of change and how sometimes it takes time for your message to be heard.

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