This commentary is on Tradeview's The Star article. Link here https://www.thestar.com.my/business/business-news/2021/08/07/comfort-in-consensus-or-victim-of-it . (Picture above from The Star)

Too lazy to read the 1300+ word article? Let's begin with a summary.

[SUMMARY: Tradeview starts his article with Olympics Diving being judged on consensus scoring system. Purpose of "consensus system" is to remove extreme evaluations. (too high or too low) Similarly, stockmarket has "consensus system". If company earnings beat research analysts' consensus, share price is likely to go up, & vice-versa. (research analysts' consensus means the overall average price target & opinion of stocks)

However, Tradeview points out the difference between Diving and Stockmarket consensus. Stockmarket "consensus system" doesn't cancel the extremities in evaluation. Research analysts' consensus may be reached through herd mentality among peers. 

Then, Tradeview compares research analysts' consensus on TECH sector & GLOVE sector. Tech sector is given high valuations, constant upgrading of stock prices. Glove sector was downgraded, given lower valuations by research analysts. Both are cyclical sectors, but Tradeview raises the question. How long would actual earnings of Tech sector catch up with its high valuations? Tradeview was of the view that the plummeting glove share prices was as if Covid-19 never occured, despite the recent quarters of explosive earnings growth like tech stocks.

Lastly, Tradeview hopes that research analysts would not seek "comfort in consensus". He hopes research analysts should use their expertise & integrity in writing reports. This prevents stockmarket from pushing stock price too high, or too low in sell-off.]

COMMENTARY: 

The analogy between the "consensus system" between Diving and Stockmarket is splendid. The article also explained the "consensus system" of research analysts clearly for the layperson to understand.

That aside, Tradeview should not compare Tech sector with Glove sector. Much like, an apple shouldn't be compared to an orange, although both are fruits. 

Take a look at research analysts' reports on various Tech stocks. Generally, forecasted Revenue & Profit would continue growing until 2023 for Tech stocks. The same cannot be said for Glove stocks, where forecasted Revenue & Profit is projected downwards. Sectors that have potential revenue & earnings growth would be valued higher than those which are expected to face slowing or negative growth.

While tech sector valuations may look frothy now, and glove sector valuations seem dirt cheap, it shows the stockmarket is a discounting machine. It is forward-thinking. Indeed, Covid-19 brought great fortune to glove companies, due to severe glove shortage. But as vaccinations increase, and hospitals & pharmacies having stocked up sufficient gloves, wouldn't the glove shortage subside, and ASPs falling normalising in future? Will the explosive earnings growth persist in future? These uncertainties are potential threats to glove companies' future growth, which led to research analysts' downgrades. It is these uncertainties, not "comfort in consensus", that led to the same tune of analysts. Right now, analysts' see a bleaker outlook for glove sector, and a brighter future for tech. If the optimistic forecasts for tech falls below expectations, the market will correct itself. If one insists on raising the issue on analysts' consensus, why not raise it last year, on the overly bullish consensus of analysts'? Research analysts write based on current facts, then project the future earnings through intrinsic value calculations. 

CONCLUSION:

Beauty lies in the eyes of the beholder. The stockmarket doesn't see the glove sector as attractive as before. It is smitten with the beauty of the tech sector. But most importantly for current investors, do you see the beauty of either? Your view is far more important than analysts' consensus.