CFAP: Awards and Awardees

Cheers to the analysts, traders, banks and brokerage houses just awarded by the CFA Association of Pakistan (CFAP).
In the equity brokerage business, the awardees of 2009s poll-based CFAP honour include some top and respected names from the investment community - the likes of Hamza Marath (best analyst) of KASB Securities and Mustafa Iqbal (Best Trader) of Topline Securities.
While the idea to recognise the efforts of these financial pundits is quite notable, the fact that the selection of the awardees is based on opinions of some 60 odd fund managers is an eyebrow raising factor.
This isn to question the competence of the awardees or to challenge the opinions of fund managers; but to advocate the case for an evaluation based on authentic data rather than sheer perceptions or even empirical evidence.
Of the many assessment factors, the survey form sent to fund managers inquires about the analysts quality of research, ethics, timeliness, and the all-too important aspect of accuracy is also subject to the views of the fund managers.
This, in an industry which is perhaps the emblem of documentation in Pakistan, appears to be a casual exercise.
While ethics or other subjective issues may be left to the perception of research consumers, elements such as accuracy and timeliness of an investment call, can be documented, and henceforth form the basis of an analysts evaluation.
Accordingly, over-performance/underperformance of an analysts earnings forecast and target price to actual results should be empirically incorporated in the evaluation of analysts.
It may be a tall task, but in the post-crisis world, where the investment community is trying to reform itself across the world, this should be the way forward - at least, for the sake of transparent investor awareness.
And while we are at it, here is a message to the global investment community, including its local counterparts: the time is ripe to shred your epistemological arrogance and also your bullish bias. For whose who are wondering why, take a closer look at the graphs.
Failure or hesitance to incorporate the risk caveats (including uncertain exogenous factors), or late reaction in price revisions can cause massive losses to investors. And for sure, the market doesn need a repeat episode of 2005, 2006 and 2008 crashes.