NEW YORK (MainStreet) Choosing individual stocks to buy can be a risky proposition, so many investors rely on the research and recommendations made by analysts from investment banks.
Determining which recommendations are valuable and trustworthy can be a daunting task for investors who want the entire picture to draw their own conclusions.
TipRanks, a financial technology company headquartered in Tel Aviv Israel, developed a financial accountability engine to help investors find analyst reports quicker and to check their outcome. TipRanks uses advanced text analysis and financial algorithms to determine the analyst's rate of success and the earning or loss generated by their recommendations when benchmarked against the S&P 500.
"We want to determine who is worth listening to," said Gilad Gat, chief technology officer and co-founder of TipRanks. "Our goal is to provide a simple way for investors to avoid costly mistakes that happen when taking advice based on how convincing the person is or how prestigious is the firm that they work for."
The software tracks over 5,000 analysts and contains data of over 100,000 analyst recommendations since January 2009. TipRanks compares these recommendations to check how many outperformed the S&P 500, an index which is based on the market capitalizations of the 500 large companies listed on the NYSE or NASDAQ.
"We discovered that on average, only 48.8% of the analyst recommendations provided better returns than the S&P 500 in the three months following their publication," Gat said.
TipRanks empowers investors by showing them the measured performance of any analyst they come across online. Investors have full access to all of the analysts' past recommendations and current portfolio. They can also compare the analyst's recommendation to recommendations made by analysts with higher measured performance. Investors can use TipRanks to look up analyst ratings on any stock and get an instant notification any time a recommendation by a top performing expert is released.