Why the charting company will never give you a price target

The most common request we get from people who see an early version of the charting company is some variant of: this is good, now tell me whether to buy it.

We are not going to, and the reason is not modesty. It is that coverage and prediction are different products with different failure modes, and combining them makes the first one worse.

The epistemic argument

Knowing what changed is tractable. A risk factor was added on this date, in this filing, with this wording. The CFO stopped reaffirming a target. An 8-K disclosed a departure. These are facts with addresses. They can be found, verified, and shown to you with a link.

Knowing what happens next is not tractable in the same sense, and pretending otherwise requires converting a genuine uncertainty into a number, which is the single most effective way to make somebody stop thinking. A price target is a confidence display. It compresses a wide distribution into a point estimate and then invites you to act as though the point estimate were the distribution.

The product argument

If the charting company issued ratings, every piece of research it produced would be read as supporting the rating. A risk factor summary underneath a BUY is no longer a risk factor summary; it is evidence in an argument, and you would be right to discount it accordingly.

Neutrality is not a virtue we are claiming for ourselves. It is a structural property we get for free by not having a position to defend, and we would lose it immediately if we took one.

The regulatory argument

the charting company is not a registered investment adviser. It does not have a fiduciary relationship with you, it does not know your circumstances, and it is not in a position to tell you what belongs in your portfolio. Producing individualised buy and sell recommendations is the activity that regulation is specifically about, and it is not an accident that we have designed the product to sit clearly on one side of that line.

This is a constraint we chose deliberately rather than one we are working around. It rules out an entire category of feature and it makes the remaining features easier to trust.

What we will do instead

Tell you that the language in Item 1A escalated. Tell you that guidance was reaffirmed in three of the last four calls and not the fourth. Tell you that an insider sold, on what date, in what size, and under whether a pre-arranged plan. Show you the paragraph.

See the whole picture. Make your own call.