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Sunday, October 11, 2009

The Role of Stock Recommendation

I wonder how we can get together and work for common purpose to improve many things that we do for living, obliviously we would come up with millions of things are not going right comparing to developed countries. Many dreams are never formed but thrown away to the air as soon as hopes are never seen lightened in our lives. Developments, progress and achievements are rarely seen here compare to many other countries where every five years you will not recognize the place due to economic growth, developments and implementing new systems. It's all about changing, and work together for continuous improvements. Before changing anything to outer-world we need to change our minds and attitudes toward progress, changes have to come within ourselves and apply inside to outside environment, and also firm believer in order to see greater affect and progress in what we do for living.

I know you are confused with changes and stock recommendation, but let me share partly one of letters with you that was sent out to brokerage/financial firms in Bangladesh in the month of Ramadan to engage them into stock recommendation process, and of course, the intention of this is to work together in the direction of setting Bangladesh Stock Market to systematic market system and attracting more professional analysts into analyzing companies in order to provide recommendations.such great works can be rewarded with performance-based approach. Market needs professional analysts' involvement in order to uphold the image of Bangladesh stock market. Here is a letter--

"So far, over 800 people registered with within last three months of period and most of them have showed great interest of receiving recommendation in the process of registration. They are eager to receiving some guidance in the selection of specific companies' share which perceive greater value based on out-perform/market-perform, great earnings, performance-based management, etc. or opposite of all these to sell stocks.

How much investors depend on analysts' report? Probably more than what you expect because either a person is a beginner or a pro as an investor. And people around the world always rely on a whole set of decision making processes to pick the best stocks. This decision making task is a part of a daily process for market analysts in order to select a list of good stocks. The analysts conduct extensive research on companies' annual reports, corporate governance, management behavior & expertise, company's competitive advantages, new contracts for selling products, new deals, company news, innovative new ideas and so many others. A good analyst report should serve the purpose of better understanding the status of a company's growth to justify if a company's outlook is positive to buy or negative to sell stocks. Analysts' reports remain a valuable tool and offer credible information about a company for investors as long as they are diligently and independently done. Reviewing analysts' recommendations gives investors a better idea of what professional analysts think about a stock. Thus, when an analyst initiates coverage of a stock, it opens the door to thousands of investors who may never have heard of the stock before. In this way adding a company to a recommendation list brings awareness of a stock which translates to increased demand. This kind of research can be extremely expensive and time consuming but the analysts' work can be rewarded by selling research reports to local as well as global investors and establish a reputation in the market through the accuracy of performance on the stocks recommendations.

As we know, recommendations are found everywhere in the U.S. Stock market. Thousands of recommendations appears on a daily basis through financial websites, TV news and other media ranging from a small brokerage firm to world class companies like Merrill Lynch or Goldman Sachs. In short, the analyst buys & sells ratings and earnings forecasts shown on many financial sites which contain important information that could help investors making better investing decisions at the same time brokerage firms can charge for providing valuable research information.

The Bangladesh stock market is still new in comparison to the size of the capital market with other stock markets in the world and also has new investors who are involved in stock market investing for the first time in their lives, what I mean saying is fathers of this generation or grand-fathers never heard of stock market although their children involve in stock market. It's a new generation of fresh-minded individuals who feel the stock market is a great investment place that is no less than in real estate, fixed deposit in a Bank or buying gold for investments. Just because a new face of stock market and its investors, it requires guidance and systematic process of involvement by all financial institutions and brokerage firms to upgrade the image of the Bangladesh stock market. Just as many brokerage firms involve in recommendations, market Analysts who publish all or part of valuable research would give more control and direction to the investors and boost professionalism, importantly overcoming rumors on stocks often created by individuals or groups of people shorting those stocks just to reach their own objectives. Recommendation should be advised from professional individual (maybe required license by completing specific course in the future) and institution as any other country we see in stock market.

As you are an analyst or security firm owner, we invite you to take a look at our stock recommendation page at to discover all the facilities available for recommending stocks either to buy, sell or hold. This will enable you to be part of the recommendation process and ensure involvement in other news activities, thereby getting your company spot lighted in the market. Most importantly, it will enable you to reach long term objectives in the market growth strategies and attract more investors in local as well as global long-term profit making that will show favorable in the professional environment with a proven systematic marketing system. The vast majority of investors who use a systematic process, usually have a better understanding and confidence in the market. That will only happen when we are able to create a professional environment collectively, being accountable with the emphasis on doing excellent work in analyzing (risk-based rewarded), predicting and maintaining a high-standard of accuracy in recommendations.

Please join with recommendation process by creating your account with at page, and then email us with your Email address and name of your firm to Then we will email you back with details information that your account is ready for recommendation. You have a list of choices like under-perform, neutral, hold, strong buy or sell, market perform and etc. Once specific account is assigned to individual firm you have access to your own recommendation for update, delete or create."

It is unfortunate that only a few firms have taken this letter seriously and emailed me for details information. However, I am still hopeful in way that some day there will be a systematic process in Bangladesh Stock Market, and some developments will be taken place that we may be able to say we complete the marathon, although we are in the last place in the competition of global financial market improvements.

by Kabir Ahmed (


the_skywalker said...

I wonder how many of the brokerage firms in Bangladesh have got trained analyst. The market is too much retail dominated and speculation driven. I have my doubts whether analyst recommendations would be effective. Even here in west analysts are often hilarious in their recommendations because they always play safe and work with the companies. We first need good news sources like CNBC-INDIA so that people get real information rather than depending on word of mouth.

Earth Reality said...

Mr. Kabir has right concerns. But first things first:
1.There has to be an institute, a tough curriculum, a licensing authority to issue licenses to would be Investment Analysts & Advisors.
2.Without a formal Govt. approved sructure every TDH will claim to be an anlyst and further complicate the capital market.
3.So first, move for a licensing authority (hopefully who can't be bribed for licences)and a curriculum based on high standards.