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Reader:

I have never trusted analyst ratings. I only use analysts' reasoning as a starting point for homework. But one thing that has always puzzled me is that occasionally, some analyst will initiate coverage with a sell. What's this? Why bother? Are these guys short the stock or trying to make an impact on a related stock, or is it just another brilliant analyst technique?

-- L.A.

TST Recommends

David Peltier:

In my opinion, investors of all shapes and sizes should take all analyst ratings with a grain of salt.

Reading a couple of reports on a company you've never really looked into is a quick way to get some good insight into the current state of a company's business -- and help you come to your own decision. That's because oftentimes, even with the same set of facts, three analysts will come to three different investment conclusions about a given stock.

David Peltier is a research associate at TheStreet.com In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier appreciates your feedback;

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