They collected 943 whispers on 127 companies and compared them with 3,546 analyst forecasts for the same firms. Perhaps more important, the authors also concluded that Internet whisper numbers were better gauges of Wall Street expectations than First Call estimates. They calculated what their gains would have been had they bought shares of companies that beat their whispers and sold shares in companies that missed them. After all, people can post anything they want on the Internet, true or not. One of the study's authors, Michigan's Mark Bagnoli, has a few guesses as to how good whispers find their way onto the Net.
Some investors are in fact posting opinions they receive from their brokers.
Others are repeating what they hear on CNBC or read in a newspaper. Others may be making educated guesses or using contacts at a company. In the end, the groups seem able to throw out obviously incorrect numbers and come to a sense of the whisper. Now, we're not recommending you trade on Internet whispers. The study's results are an average of hypothetical trades in 127 companies.