As analysts seek to differentiate themselves and publish new, compelling research on companies within their sectors, there will inevitably be wrong calls.
“Intellectual honesty is key as a sell-side analyst,” Covello said. “You’re not fooling anybody when you’re wrong about a stock. Trying to hide from that is not the right way to go about it.” Instead, Covello says owning your mistakes is one of the central components in being a great sell-side analyst.
“It’s important to remember: if you get it right six out of 10 times, you’re doing a phenomenal job for your clients, adding value to the market. But that also means you’re failing four out of 10 times, and that can be difficult, mentally and otherwise,” he said. But, at the same time, holding yourself accountable for both right and wrong calls speaks to credibility and helps to build an analyst’s reputation.