By now you've probably heard about Goldman Sachs' flip-flop regarding the financial industry. What you may not realize is the kind of dis-service Goldman provided for investors who listen to what they say. And it wasn't just the retraction of their upgrade that hurt. The timing of their upgrade was also off. They pulled investors into the sector at the exact wrong time, and then pushed them out of it way too late.

Here's a quick summary. Goldman upgraded the financial sector back on May 5. The new rating was a "neutral" weight, so they were presumably viewing financials as a sector to underweight prior to May 5.

Since then, the performance of the financial sector has been horrible, though the market's hasn't been much better. On Tuesday,Goldman Sachs had finally had enough, scaling back their opinion on the financial sector to an "underweight."

No big deal. They're just doing their job, right? Well, yeah, they're doing their job. They're just not doing you any good.

Take a look at the chart below, where I've marked the upgrade and the downgrade. Specifically, look at where the upgrade and the downgrade occurred. See anything odd? In at the wrong time, and out way too late.

XLF Financial Select Spider ETF - Daily


Now in all fairness to Goldman, it happens. They're a reputable company for a reason, and nobody is going to be perfect. When I look at that chart though, I have to wonder two things.

1. Were they chasing performance? I don't see anything fundamentally different with the financial industry now than I did before May 4. Maybe they do, but I have to wonder if they saw the chart perk up just enough to look enticing.

2. What is their sell discipline, or do they even have one? To cancel the opinion after the big loss doesn't help investors who got in with the upgrade.

With regard to question #1, these massive fundamental-based analyst firms are using charts more than they might like to admit. As far as question #2 goes, I think the answer is no. There's no real "sell" discipline that I can see.

That's not the end of the story though.

If it were just this one instance, we might chalk it up to bad luck. It's not this one instance though. Unhelpful forecasting is not unique to Goldman, not unique to sector picking, and not unique to the current market environment.

Take a look at another chart. This time it's an individual stocks, and instead of just Goldman's picks, I've market every upgrade or downgrade with an up or down arrow (respectively). See if you see the oddity again.

Ford Motors (F), with upgrades/downgrades - Weekly


First of all, what the heck is an upgrade or downgrade to "neutral" supposed to mean? I guess if enough people throw enough darts, eventually one of them will land a bullseye. Ford's seen 15 opinion changes over the last couple of years, from about 10 different analyst firms. Some were right, but too many were wrong.

Nothing is perfect. When I look at the overflow of opinion on Ford's chart though, all of which was in conflict with other opinions at some point. It just reminds me that I'm at least as well off doing my own research or using my my own tools.

Price Headley is the founder and chief analyst of BigTrends.com.