Analyst recommendations: well, that was helpful.

President Truman asked for one-handed economists to avoid hearing “on the one hand…but on the other”. Winston Churchill complained that any meeting with 2 economists provided 2 competing views – unless one of them was John Maynard Keynes in which case you got 3.

And so it is with equity analysts who try at one and the same time to recommend but point out the probable pitfalls of their advice. Consider this graph from a Morgan Stanley research report:

It so happens it is a great piece of research. But one must wonder about the worth of the blue triangle which says a buyer might make 61%. But on the other hand he might lose 75%. And there, in between, is the ‘Lord Keynes’ view that a gain of 10% is most likely.

This is why hedging is attractive: the finest brains of analysts and economists cannot – and as a rule do not – forecast. They assess current conditions.