Statistical Organizations, Opinions

On the other hand, some of the best known-such as Moody’s Investment Service and Standard & Poor’s-are identified with statistical organizations that compile the voluminous statistical data that form the basis for all serious security analysis. These services have a varied clientele, ranging from the most conservativeminded investor to the rankest speculator. As a result they must find it difficult to adhere to any clear cut or fundamental philosophy in arriving at their opinions and recommendations.

An old established service of the type of Moody’s and the others must obviously provide something worthwhile to a broad class of investors. What is it? Basically they address themselves to the matters in which the average active investor speculator is interested, and their views on these either command some measure of authority or at least appear more reliable than those of the unaided client.

For years the financial services have been making stock market forecasts without anyone taking this activity very seriously. Like everyone else in the field they are sometimes right and sometimes wrong. Wherever possible they hedge their opinions so as to avoid the risk of being proved completely wrong. (There is a welldeveloped art of Delphic phrasing that adjusts itself successfully to whatever the future brings.) In our view-perhaps a prejudiced one-this segment of their work has no real significance except for the light it throws on human nature in the securities markets.