[rexstjohn]

One of the important properties of the stock market is that it is a chaotic system which changes based on observations people make of the system itself. This has fascinating implications.

To understand why this is important, compare the following: If everyone looks up at the sky and sees rainclouds, this does nothing to effect the likelihood of rain. The weather doesn't depend on what people think about it.

With the stock market things are different. If Tesla stock goes to $400, you might have a pool of people looking at charts, comparing Tesla's performance to it's 200 day moving average and deciding that this movement is "too quick" - so they start selling Tesla and thus change the stock's behavior. It is a self-reflective variety of chaos.

The same is true of stock analyst opinions: A publicly voiced opinion of a stock directly effects the stock because people look to analysts for guidance. If 20 analysts from important firms like Goldman Sachs appear on CNN / Bloomberg swearing that Tesla is an outrageous BUY stock, it will cause more people to buy the stock because analysts opinions effect the price behavior.

Long story short, what the author may actually be observing to some degree is that analyst opinions may CAUSE stock outperformance.

[LVB]

My dad had an old book on technical analysis, published in the early 60s. The intro talked about how prices move, usually with top execs telling all their friends and family to buy, and then those people telling their network, and so on, ending with a press release. I'm sure there's still plenty of that going on, but I found it funny to see it just spelled out as the default mechanism 50+ years ago.

[TomK32]

The dynamics of the stock market are even more complicated. Say TSLA does hit the $400 then you'll see a bunch of sell orders hitting month old targets. Certain dates when a lot of short/long contracts are resolved (Sept 15th is the next I think? and there is a bunch of call options with a $400 base price) can somewhat have an influence. And of course with a stock like TSLA there might be a lot of people being in the short doing everything they can to get the stock down to make their profit. Analysts are such a tiny part in this game. Right now the whole tech industry is overheating, just like the dot-com bubble back in the days.

[youngprogrammer]

In my analysis, I do hypothesize that analyst opinions become a self-fulfilling prophecy as you described. However, I would like to believe that analysts do some sort of sophisticated breakdown and analysis of a company's financial statements and market outlook when releasing a justifiable rating.