Can you Rely on Stock Rating from Moody's and other Ratings Companies?
At a time when many people have lost lots of money in the stock market we find out that perhaps ratings companies have not been g
ive more weight to earnings than to other financial indicators. Congress is looking into allegations that ratings companies failed to rate stocks appropriately that were backed by mortgages.
Many investors have put their trust in companies such as Moody’s and Standard & Poor’s. Now there are allegations being made by whistleblowers within companies such as Moody’s that earnings were being weighted inappropriately when scoring stocks and bonds. Unfortunately many investors feel disadvantaged already when compared to institutional investors that are able to access more financial data. At the very least this calls into question how much these ratings should be relied on by the average investor.
To read the story check out this link.
Reuters' Story "Moody's Secretive Nature Described to Congress" dated Sep 30, 2009
