Research analysts are generally categorized into three groups: sell-side, buy-side and independent. Sell-side analysts are those working for the brokerage firms, typically the investment banks. In contrast, buy-side analysts work for the money management firms, such as mutual funds, pension funds and hedge funds, which actually invest money in the markets. Independent analysts are independent from both the brokerage firms and investing institutions. Most regulations aim at sell-side analysts given the serious potential conflicts of interest between the integrity of their reports and their own financial interests. Reports by sell-side analysts affect, directly or indirectly, the issuers' offering and thus the deals of their brokerage firms. Therefore, most regulations regarding research analysts are designed to prevent analysts from producing biased reports favoring the issuers and indirectly benefiting from such reports. There are research firms not under pressure to give positive recommendation as they run the research business in a different way. This type of independent research provides reports open to the public, rather than researching for the brokers or issuers. Muddy Waters (MW) is one of these research firms i.e., independent research for free publication. How do these independent research firms make profits? Given the characteristics of a short seller and a research analyst, the argument for the combination of these two is quite convincing. Firstly, the market needs independent research firms to provide objective and unbiased reports, especially unprejudiced negative ratings. Secondly, to be independent and unbiased, the research firm has to find another way to earn profits rather than selling reports to brokers or issuers. In other words, financial professionals need incentives to be independent research analysts. Profits from short selling satisfy the need. Nevertheless, when research firms are allowed to short sell stocks they cover, can they really generate reports without bias? MW first made its name by successfully revealing the problems of some U.S. listed Chinese firms. As MW's reports caused a plunge in stock prices upon their release, the firm has earned sizable profits from its short positions in the stocks covered by the reports. Consequently, the objectivity and trustworthiness of MW's reports are in doubt. There is the possibility that MW manipulates the stock price by rating the stock negatively in order to profit from its short position. The research firm is no longer under pressure to rate positively, but it now has the financial incentive to rate negatively. 1- Explain the ethical problems related to the conflict of interest involving the sell-side, buy-side, and independent research firms. Do you think that MW reports can be fully trusted and used for investment decisions? 2- Relating to question 1 above, identify the parties involved in the investment process and describe their roles. 3- Are there any alternatives or any potential solutions that investors can use to alleviate the problems of analysts' conflict of interest when they make their investment decisions? Please report as many alternatives as possible. 4- What are, according to you, the best investment approach that you would recommend when investing in the stock market to mitigate the problems of conflicts of interest? Explain your choice and enumerate the steps to follow for a successful investment strategy