Newspaper article THE JOURNAL RECORD

A Stock Market Tip: Listen to the Whispers

Newspaper article THE JOURNAL RECORD

A Stock Market Tip: Listen to the Whispers

Article excerpt

NEW YORK -- As an investor in stocks you have of course heard about whispers. You haven't? Then there's a good chance you're not getting the very latest and best forecasts of corporate earnings.

The whispers referred to are not the old-fashioned kind -- "Psst, have I got a stock for you" -- but the new electronic sort.

As newly defined, whispers are somewhat mysterious estimates that appear on computer Web sites prior to the release of corporate earnings. They are unsourced; seldom can you find their origin. But on average, they can be more accurate than professional estimates. If you want a short-term investing edge, therefore, listen to the whispers. It's what clever Internet-bright investors are doing, and a university study suggests that they may be profiting. The computer nerd seems to have joined the investing mania. Like old-fashioned rumors, whispers are pass-along information newly fashioned for the Internet. They could be nothing more than the source's personal estimates, but who knows -- they also could be based on what is sometimes called inside information. A university study indicates that whispered earnings projections are more accurate than analyst estimates offered by First Call, whose reports are the most widely used in the marketplace. And that savvy traders can use them to make money. Professors Mark Bagnoli of the University of Michigan, Messod Benish of Indiana University and Susan Watts of Purdue University began their study at the most elemental level: They simply began searching under the key word "whisper." It seems nobody had ever gathered and analyzed whispers. In fact, the researchers could find no mention of the term before 1984, and interest didn't seem to grow until around the time of a Wall Street Journal article in 1997. In all, they gathered 943 whisper forecasts for 127 companies and compared them with forecasts by more than 3,500 traditional analysts as provided by First Call, a division of Thomson Financial Services. …

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