“Straight talk has never been the strong suit of Wall Street analysts,” writes Patrick McGeehan in today’s New York Times.

“When analysts do not think a stock is worth buying, they rate it a ‘market performer’ or a ‘weak buy.’ When they think investors should sell a stock, they tell them to ‘hold’ or ‘accumulate’ it.

“Roundly criticized for being afraid of upsetting corporate executives by saying ‘sell,’ analysts often respond that sophisticated investors can read between the lines of their reports to determine when they have soured on a company. Maybe any value does lie between the lines, because, as a new Internet-based tracking system shows, following their advice word for word would not be an enriching experience.”

“According to Investars.com, a subscription service that developed a method of measuring the value of the advice of brokerage firms, following the recommendations of the major Wall Street firms would hardly have been profitable over the last four years — and could have been quite costly. The results might make investors wonder why they should heed the advice, much less pay for it.”

“Since the start of 1997, only four of the biggest firms have had a positive overall return on the ratings they published on individual stocks, according to Investars.”

“The best of the bunch, Credit Suisse First Boston, had a net gain of 7.6 percent over almost four and a half years, while the worst, the Robertson Stephens unit of the FleetBoston Financial Corporation, had an overall net loss of more than 36 percent.”

” ‘We think the investment banks should have a responsibility for their recommendations,’ said Kei Kianpoor, the chief executive of Netologic Inc., a New York company that operates Investars. ‘Investors need an impartial source of information about which firms give the best advice.’ “

“Although some analysts, like Mary Meeker and Henry Blodget, have become celebrities, Investars does not focus on individual analysts, Mr. Kianpoor said. Most investors are customers of a particular firm and consumers of the advice of several of its analysts, he explained.”

“To place values on the firms’ stock ratings, the site treats each new rating or change in rating as a trade, assigning a dollar value. For example, if a firm issued a ‘strong buy’ rating on Microsoft today, Investars’ system would treat that as a hypothetical purchase of $450,000 of Microsoft shares at today’s price. Then, if the same firm lowered that rating to ‘buy’ a week later, the system would reduce the value of the firm’s Microsoft holding to $300,000.”