Look, I swear I try not to be surprised anymore. But the financial market is like that Black Mirror episode you think is too over the top — until it becomes reality.
Here's the news: Allstate (ticker: ALL) received an "Outperform" rating — meaning "it'll beat the market" — and guess from whom? From Allstate itself.
Yes. You read that right.
It's like the Joker giving his own makeup a 10 out of 10. It's the baker saying the best bread in town is his. It's the guy on Tinder super-liking himself.
What the hell is an "Outperform" rating?
For those who don't live in this circus, let me translate the Wall Street jargon:
Outperform is the fancy way analysts say "buy this damn thing." It's one notch below "Strong Buy," but in practice it's the same message: "put your money here because it's going to outpace the broader market."
The problem? When the recommendation comes from an interested party, it's worth about as much as your mother-in-law's advice on your marriage. It might even be right, but the conflict of interest is so obvious it hurts.
The structural problem nobody wants to talk about
This isn't exclusive to Allstate. It's a systemic disease in capital markets.
Warren Buffett has talked about this with that deadly calm of his: "Wall Street is the only place where people who arrive in Rolls Royces take advice from people who arrive by subway."
Nassim Taleb went further — and rougher. In "Skin in the Game," he hammers the point: if the analyst doesn't have his own money on the table, his opinion is worth zero. Less than zero. Because it can lead you astray wearing a badge of credibility.
And here we have something worse: it's not just an analyst with no skin in the game. It's the company itself self-recommending. The conflict of interest isn't hidden — it's plastered right across the face of anyone willing to look.
So is Allstate actually any good?
Let's separate the wheat from the circus.
Allstate is one of the largest insurers in the U.S. A massive company, listed on the S&P 500, with decades of operations. It's not a meme stock or some garage startup.
Over the past few quarters, the insurance sector in the United States went through a major adjustment. Climate catastrophes squeezed results, but insurers that managed to reprice their policies — meaning charge more — started seeing margins improve.
Allstate fits that group. Recent numbers show a recovery in profitability. So it's possible the stock actually has upside.
But — and this "but" is Grand Canyon-sized — that doesn't justify the self-recommendation. It's one thing for the investment thesis to be valid. It's another for the company to be both referee and player at the same time.
What should you do with this information?
First: be suspicious of any recommendation that comes from an interested party. Always. No exceptions.
Second: if Allstate interests you as an investment, go do your homework. Look at the combined ratio (a crucial metric for insurers — the further below 100%, the more profitable the operation). Look at the dividend track record. Look at how management handled recent climate events. Compare it with Travelers, Progressive, Chubb.
Third — and most importantly: never, ever, under any circumstances make an investment decision based on a one-line rating. That's intellectual laziness. And laziness in the financial markets is paid for with money.
Benjamin Graham, the father of value investing, warned us back in the 1930s: "The intelligent investor is a realist who buys from optimists and sells to pessimists." He said nothing about buying based on corporate self-praise.
The question that lingers
If Allstate needs to recommend itself, could it be that nobody else is all that enthusiastic?
Or is this just another normal day in the puppet theater they call the financial market — where everyone smiles, everyone recommends, and the retail investor is always the last one to find out he was the clown at the party?
Think about that before you hit the buy button.
