Question

Many market participants believe that sell-side analysts are too optimistic in their recommendations to buy stocks, and too slow to recommend sells. What factors might explain this bias?

Answer 1

Answer:

• They are related to Brokerage firms
• Brokerage firms issuing stocks will always encourage investors to buy rather than sell off their stocks.

Explanation:

Sell-side analysts mostly work for various brokerage firms hence the reason why they are too optimistic in their recommendations to buy stocks while they are also too slow to recommend sells .

And Brokerage firms will always encourage investors to buy their shares or stocks ( buy-side) instead of selling off their shares or stocks