Broker Recommendation Meanings

Broker Recommendation Meanings

Broker Recommendation Meanings

Broker Recommendation MeaningsBroker recommendation meanings can be confusing. There are only three actions you can take with shares. Buy some, Sell if you have some or Hold if you have some. Obscure recommendations don’t really help you. Broker recommendation meanings are not fact. They are just an opinion and should be treated as such. I certainly wouldn’t act solely on a broker recommendation.

I’ve categorised each of the broker recommendation meanings into the possible actions. I only use the broker recommendations to confirm my own research, not to override it. If I’m considering buying a share and there are a lot of recommendations I categorise as Buy, then it’s a good sign. If there are a lot of Hold recommendations, I’ll revisit my research but it wouldn’t necessarily stop me buying. Sell recommendations get the most respect from me. If there are enough brokers giving sell recommendations, I’m unlikely to buy.

I totally misunderstood the Corporate recommendation for a long time. I assumed that it meant it was fantastic, like a Conviction Buy. Wrong, Corporate means that the organisation has some affiliation with the share in question. Corporate ratings should be ignored because they could be biased.

My Buy Interpretations

Conviction Buy = As close to a sure thing as possible
Strong Buy = A very good chance of performing well
Buy = A good chance of performing well
Overweight = Expected to perform better than average
Outperform = Expected to perform better than average
Accumulate = Expected to perform better than average
Add = Expected to perform better than average
Moderate Buy = Expected to perform better than average
Speculative Buy = Higher risk but potentially higher return

My Hold Interpretations

Hold = Likely to perform as expected
Neutral = Likely to perform as expected
In Line = Likely to perform as expected
Equal Weight = Likely to perform as expected
Sector Performer = Likely to perform as expected

My Sell Interpretations

Reduce = You should hold a smaller amount than usual
Weak Hold = Likely to perform slightly worse than expected
Underperform = Likely to perform worse than expected
Underweight = Likely to perform worse than expected
Moderate Sell = Considered to be overpriced
Sell = Some sort of issue so sell
Strong Sell = Some sort of serious issue so sell quickly

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