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As they typically do, analysts are getting skeptical about 12 months after it was appropriate to do so:

Merrill Lynch, the nation’s largest brokerage firm, unveiled a new system on Tuesday for rating stocks that suggests Wall Street finally may be mustering up its courage to say “sell” more often. Starting in June, Merrill will require that its analysts assign “underperform” ratings to 1 out of every 5 stocks they cover. About 12 percent fall into that category now.

It’s a tectonic shift for Merrill, the so-called thundering herd whose insignia, a bull, symbolizes the natural exuberance of the market place.

The move underscores an industrywide effort to inject a healthy dose of skepticism into stock research at a volatile and uncertain time for the markets, the broader economy and Wall Street banks themselves.

For those that don’t know, Merrill’s mascot is a bull (see the photo above). And now the bigggest bull on wall street has become a bear – it’s enough to make a contrarian buy the Growth Fund of America.

Merrill Tries to Temper the Pollyannas in Its Ranks
Jenny Anderson and Vikas Bajaj
The New York Times