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Transcript
Enron Episode - Buy, buy, buy
 In 2000, 14 of the 16 analysts who followed Enron
were recommending it as at least a "buy." And Enron
stock hit an all-time high.
 By last October, with the company on the verge of a
meltdown, 18 analysts were following the company,
and each was still recommending it, 14 of them
calling it a "strong buy."
 Analysts were listening to Enron's glowing forecasts
instead of doing their homework. Analysts have
become management stenographers!
 How could it possibly happen? Insiders say analysts
often have a herd mentality. If a stock is on the move,
and everyone else is recommending it, it isn't easy to
buck the trend. But in the case of Enron, there may
have been more to it than that.
 Enron was always making deals, buying smaller
companies to help it expand. Every deal needs an
investment banker. And almost every analyst's firm
had an investment-banking division that stood to
make millions of dollars in fees.
 Analyst John Olson, who issued a "strong buy"
recommendation on Enron on Sept. 28, less than three
weeks before Enron began to implode, says analysts
were under pressure to be positive.
 "It was unspoken, unwritten, but there was a strong
presumption on the part of the investment banks that
if they were ever going to do any business with Enron,
the analyst had to have a 'strong buy' recommendation
on the stock," says Olson, of Sanders Morris Harris.
 Securities lawyer Jacob Zamansky blames the
analysts. "Analysts, according to industry standards,
are supposed to be objective, unbiased in doing their
research," Zamansky says. "They've done a great
disservice to the public."
 Even today, with the company mired in bankruptcy
and scandal and its shares de-listed from the New
York Stock Exchange, six analysts suggest investors
hold onto the stock. Two even call the stock a "buy."
Only three analysts are recommending investors sell
the stock.