《考研英語閱讀理解100篇 高分版》 Unit 23 - TEXT THREE

The past few years have not been kind to Wall Street's equity analysts. Accused of helping to inflate the Internet bubble, new regulations were imposed upon them after it popped. Research budgets subsequently tumbled. Fund managers are increasingly bypassing the widely distributed wares of traditional research providers, turning to specialist firms instead. Less than six months ago, Merrill Lynch's head of research complained that Wall Street analysis was being “Napsterised”, or pirated. Some big financial firms, such as Prudential, have closed their research arms. Others are pondering their future in the business. To cap it all, a recent study suggested that it was all too easy for companies to buy the loyalty of those who cover their stock. The analyst's heyday would seem to be long gone.
But times are changing again. As markets sputter, analysts are regaining some clout. American shares plummeted on August 28th partly because Merrill Lynch's Guy Moszkowski cut his rating on several banks. Another Merrill analyst had earlier caused an even bigger quake by downgrading Countrywide, a big mortgage lender. And shares in Bear Stearns leapt when Dick Bove, an analyst with Punk Ziegel, merely pondered the possibility that the broker might receive a cash infusion from a foreign investor.
One explanation for this revival of influence is that, with markets so febrile, any shift in opinion is bound to have an exaggerated effect. But there may be more to it than that. As uncertainty grows, investors seem to be placing a higher value on research than they did only months ago. There is nothing new in this, reckons Mr. Bove, a 40-year veteran of the industry. He asserts that nobody cares what analysts think in the good times, when what matters is deploying your money as quickly as possible. But the tables quickly turn when markets fall, as investors seek to steady their portfolios. Mr. Bove argues that the golden age for equity analysts was the long bear market of the 1960s and 1970s, when advice on how to avoid losing money was highly treasured.
Another factor is the loss of faith in “quant” funds, which trade using complex computer models. Their recent problems have pushed investors back towards “more bottom-up, fundamental analysis”, says Lara Warner, head of American research at Credit Suisse. “People suddenly want to understand what they're holding.”
Recent structural changes also play a part. Since the “Global Settlement” of 2003, which severed the links between investment banks' dealmakers and their research departments, the banks have begun to tie analysts' pay more closely to performance. Bold calls earn bigger bonuses, if they prove correct. Ideas that stand out, and are thus valuable to hedge funds seeking “alpha” (above-market) returns, are also rewarded.
The audacity of some analysts stands in contrast to the spinelessness of Moody's and Standard&Poor's, which showered complex structured products with top-notch ratings and then twiddled their thumbs until they could no longer avoid downgrading them. By growing too cosy with their paymasters in structured products—the banks that package them—the rating agencies have ended up hopelessly in knots. A bit like equity analysts during the dotcom boom, in fact.
1. According to the first paragraph, which of the following statements is TRUE about the Wall Street's equity analysts?
[A] Their value were severely doubted and criticized by all.
[B] They were accused of exaggerating the values of the Internet stocks.
[C] They were facing the reverse trend of their business popularity.
[D] Big firms were beginning to abandon them.
2. The result of the study mentioned in the first paragraph implies that _____.
[A] the company need not Wall Street's equity analysis any more
[B] the stock holders are less dependent on the equity analysts
[C] suggestions by the Wall Street equity analysts are worthless
[D] shareholders are more sophisticated after the Internet bubble popped
3. The analysts are regaining their influence recently because of the following reasons except _____.
[A] the investors need more suggestions on their portfolios
[B] the market is now turning to be more tolerant of analysts' exaggeration
[C] the analysts are separated with the banks
[D] the quant funds have some problems in trading
4. Who are more likely getting high pays from the banks after the “Global Settlement”?
[A] Analysts who provide bold calls on the equity.
[B] Analysts who could bring good returns for the funds.
[C] Analysts who could provide correct evaluations.
[D] Analysts who could hedge funds.
5. The rating agencies are a bit like equity analysts during the dotcom boom in that _____.
[A] they tend to inflate the value of Internet stocks
[B] they have too close association with their clients
[C] they have not evaluated the structured products properly
[D] they were reluctant to downgrade their products