"Strong Views, Weakly Held"

"Strong views, weakly held" is the critical principle futurist Bob Sutton identified to navigate uncertainty. I couldn't agree more.

One of the biggest nuisances sell side analysts face is the reluctance to flip their investment views overnight. The practice is not forbidden, but rare. Most analysts choose to "ease into" their ratings change, from Buy to Hold, then from Hold to Sell. It makes sense in theory, because most analysts prefer to identify themselves as fundamental analysts. Unless a unforeseeable, major event such as natural disasters occur, fundamentals don't change overnight. Those analysts are brave enough to make the call can be perceived as fickle and lacking "conviction".

In practice, I would argue, the change from Underperform to Outperform should happen more often. Ideas accumulate gradually. When they reach a critical mass, it often calls for a drastic change in analysts' stance. But the drastic change often implies that analysts are wrong previously. I think fewer people are brave enough to admit directly that they were wrong.