What has been the reaction of the research sections of large foreign banks to the current global crisis? Did the proportion of their “sell" recommendations rise last year when stock prices were sky-high, and has the proportion of their “buy" recommendations increased now that stock prices have crashed? We took a look at the global recommendations of some of these banks over the past year. The data is derived from the research reports of the respective banks.

Merrill Lynch had 45% “buys" in its global coverage on 1 October, down from 47% on 1 July. “Sell" recommendations went up from 29.7% on 1 July to 31% on 1 October. Interestingly, however, the broker had “sell" recommendations on only 9% of the stocks under its global coverage on 1 January. That seems to indicate it was over-optimistic at the beginning of the year and has become more pessimistic as the market went down.

UBS had “buy" recommendations on 55% of the stocks covered at the end of September and December 2007, rising to 59% at the end of March before falling back to 56% at end-September. “Sell" recommendations were 8% of stocks covered on 31 December, going down to 7% in March and back to 8% by end-September. It looks like UBS probably thought the worst was over in March.

HSBC was clearly worried about high valuations last year, which is probably why it had “sell" recommendations on 20% of the stocks covered in July 2007. This went down to 17% in January and then to 15% in June. The bank probably thought the situation would improve. But by November, the “sell" ratings were back to 17%.

Morgan Stanley’s “sell" percentage had been remarkably consistent at 15% in August and November 2007 and February 2008, but they had increased to 18% in October. “Buy" ratings, at 44% last February, were down to 39% by October.

JPMorgan, too, had remarkably consistent “sell" ratings on 14% of the stocks under its coverage in September and December 2007 and in June 2008. But by September, it rose to 15%.

And finally, Deutsche Bank had 61% of its stocks rated “buy" in September 2007, which went up to 62% in January this year, increasing to 66% by August.

What do the ratings say? HSBC was the only bank that had a relatively high proportion of “sell" ratings last year when valuations were high and they had a relatively lower proportion of “buy" ratings. It has decreased its “sell" ratings and increased its “buy" ratings as the markets fell, although they may have jumped the gun a bit.

Merrill Lynch was the exact opposite, increasing its “sell" rating as the market fell, while having a very low proportion of these ratings at the beginning of the year. Some of the other banks seem to keep almost the same proportion of “buy" and “sell" recommendations regardless of the state of earnings or of the market, which is rather odd.

The conclusion: Most of the big research organizations are as bad at timing the market as the rest of us. But then, that’s something we knew already, right?