sell side

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Since sell-side depends so much on the brokerage margins generated through its recommendations, would it be fair to say that a BUY recommendation or a SELL recommendation doesn�t matter to the eventual generation of margins ? << All this assuming that liquidity is there in the markets and the markets are not crashing>>

Any views please..
 
well, the number of buy recommendations far outweigh the number of sell recommendations, even in bear markets...so i don't think that logic holds up.
 
I think he's right insofar as the comission charged on a sell is the same as the comission charged on a purhcase of shares.

The difference is in the amount of business generated. Sell ideas tend to generate less business vis-a-vis buy ideas. Most investors are restricted in their ability to short sell and therefore must hold a stock in order to sell it. But anyone can take part in a buy recomendation, so they tend to generate more business.
 
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yep, straight outta level III this year. hence the short side of the market is far more inefficient than the long side.
 
In addition to DeadCat's accurate description of the disparity in the addressable markets for Buy and Sell recommendations, I find it useful to look at the Buy recommendation as generating two commissions, first the purchase and then the eventual sale, while the Sell recommendation merely generates a sale.
 
Good insights. Thanks guys. If this is in L3, i am raring to have a look at the material.
 
I have to dispute the notion underlying the original premise, that they depend on brokerage "margins". While trading revenues are still clearly important, I think any particular buy or sell rating will be largely dependent upon several factors, notably existing or potential banking relationships, and trading revenue will be farther down the list.
 
HoldSideAnalyst Wrote:
-------------------------------------------------------
> I have to dispute the notion underlying the
> original premise, that they depend on brokerage
> "margins". While trading revenues are still
> clearly important, I think any particular buy or
> sell rating will be largely dependent upon several
> factors, notably existing or potential banking
> relationships, and trading revenue will be farther
> down the list.

are you implying that the global settlement has failed to stamp out ratings management as it applies to banking relationships?
 
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