The Financial Media and the Financial Analyst Community keep coming out with truly stupid pieces of analysis and news much more than others.In this new series of “Stupid Financial Analysis of the Day” I will highlight some of these stupidities.This has the function of both being entertaining as well as educational to general news readers in my view about believing in the financial media blindly.
The MarketWatch news column quotes a Citigroup analysis note that says that the Korean Stock Index Kospi level of 1960 incorporates an oil barrel prices of more than $115 .This is quite absurd since the stock market valuation at any point of time is a hugely complex function of a variety of structural,sentimental,cyclical factors.Note if 1960 incorporates $115 Oil then does a Level of 1900 incorporate $100 or something or so on.Just does not make any sense and is symptomatic of the financial news garbage that you can find on the Internet even from well known investment banks.I guess some developed countries like the USA does have an excess of financial sector weight age in the economy leading to such useless output.I have no doubt that the writers of the piece have done extensive analysis but the conclusion is so patently foolish that it earns the “Stupid Financial Analysis of the Day” award.
Investors see some opportunities in Korea
Google+However, Citigroup analysts said “our base case assumes Middle East unrest will be short-lived, and oil prices will stabilize soon — and on that basis, we believe recent weakness represents an attractive opportunity.”
The analysts believe the 1,960 level of the Kospi referenced in the Citigroup note already incorporated an average oil price for 2011 of more than $115 a barrel, higher than their average assumption of $90 a barrel.
