The stock market is not easy to predict. Even the most seasoned analysts make mistakes, which is why you never want to put 100% of your faith in broker upgrades and downgrades.
Having said that, you still want to pay attention to what analysts have to say about particular stocks, and take analyst notes into consideration when planning which stocks you buy or sell in your portfolio.
Downgrades can happen for a variety of reasons. In some cases, an analyst will downgrade a stock simply because shares have run up in value, and the stock, albeit strong, appears to have exhausted its upside potential. In this circumstance, shareholders should use the downgrade as a reason to examine his or her position in a stock, and determine whether or not the time is right to lock in some profits and take some money off the table.
In other instances, a broker will downgrade a stock due to a fundamental breakdown in a part of the underlying company’s business. When this occurs, the downgrade should carry a little more weight.
The overall market has been steady over the last couple of months, but there are some stocks out there that analysts are advising their customers to cut loose. Let’s take a closer look at five stocks that analysts want you to sell now.