- The analyst sums up an arbitrary number of positives. This is a very selective process, which includes downplaying the negatives.
- All these issues are based on public information and hence discounted into the share price.
- The analyst could argue that his views are superior to those of the rest of the investment community, and hence these issues are either under-discounted or over-discounted. What follows, is a buy or a sell recommendation.
- His superiority could be determined by looking at his past recommendations.
Analysts use arbitrariness to help them achieve their own business goals.