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For an individual who wants to do his or her own investment research on individual
stocks, bonds, or other financial assets, a tremendous number of resources are now available in the marketplace. These can range from basic sources, such as
The Wall Street Journal, to more sophisticated investment research available over the Internet and through subscription services. The following is a brief discussion of the more widely used investment research sources. For more information on investments such as investment strategies or investing for retirement, you can go to http://kenhimmler.com.
Annual reports
All publicly traded companies must file reports annually (hence the term “annual report”) with the
Securities and Exchange Commission (SEC). These reports must also be sent to all existing shareholders and to anyone else who requests one. Many companies are now posting their annual reports on their websites as well. You can research annual reports, as well as many other required SEC reports, online at EDGAR, the SEC’s reporting site (
www.sec.gov).
The SEC requires companies to include certain information in their annual reports, such as audited financial statements (income statement, balance sheet, and sometimes other financial statements). Most companies will also have a section where management discusses past progress and future plans. If you are about to invest in a particular company, you should read the annual report. In fact, you might want to obtain annual reports from the past several years and read them all. It may be useful, for example, to compare the financial statements for a number of years to see how the revenues and profits have grown (or not grown) over a period of time. It may also be useful to see if management’s vision and direction for the company have been accurate and successful.
Prospectus
A prospectus is a summary of the registration statement that a company must file with the SEC when issuing new securities. A company must make a prospectus available to any potential investors. Like an annual report, a prospectus must contain the financial statements for the company (although for a corporation issuing shares for the first time, financial statements may be somewhat limited). The ultimate goal of a prospectus is to provide full and complete disclosure about the company to any potential investors. Toward this end, the prospectus will include management’s discussion of any negative prospects, including potential legal or business risks for the company. If you plan to invest in a company’s new issue of securities, you should definitely obtain a copy of the prospectus and read it very carefully. The prospectus will tell you not only about the company’s financial performance but also about any business and market risks it may face in the future. Although you probably do not want to buy a new issue solely on the information in a prospectus, it is a good place to begin your research.
You might also want to check a copy of the Statement of Additional Information (SAI). The SAI is where you can find much of the detailed information that otherwise would be a part of mutual fund prospectuses. An SAI will include such information as an in-depth coverage of investment strategies, how management fees are calculated and spent, how performance numbers are determined, and fund directors. You can usually get an SAI by requesting one from the mutual fund, from the fund’s website, or on the SEC’s website (
www.ses.gov).
Investment books
A stroll through any well-stocked bookstore will reveal literally hundreds of books on investing. There are books on investing in
stocks,
bonds,
real estate,
mutual funds, and every other conceivable investment product. There are books on
investing for your children,
investing for retirement, and every other life situation. In addition to bookstores, your local public library may have a large section of books on money, investing, and the stock market. For anyone interested in doing his or her own research, it is well worth the time to spend an hour or two in a bookstore or library browsing through all of the investment books now available.
Newspapers
In addition to newspapers that cater strictly to business and investing (such as
The Wall Street Journal
and
Investor’s Business Daily), almost all local newspapers carry stories about companies and businesses in their area. Many larger daily newspapers will also have separate business and financial sections with local and national business stories.
Reading your local newspaper can often be an excellent source of investment information. You may be able to discover smaller, fast-growing local companies before they become known to investors on Wall Street or in other parts of the country. Even if a local company mentioned in a news story is not yet publicly traded, it may be worthwhile to follow that company in case it ever does go public. You may be able to get in on the ground floor before other investors have discovered it. For this reason, many people cut out and save news and business stories on companies mentioned in their local newspaper.
The Wall Street Journal
The Wall Street Journal
is a business newspaper that is published Monday through Friday. Virtually every investor, whether professional or amateur, reads the
Journal. In addition to general business-news stories, it has numerous articles on individual companies. Virtually any news about a publicly traded company will be reported in the
Journal.
Every day, the Journal publishes an extensive section titled Money and Business. This section always contains several articles on the financial markets and investing strategies. This section also has complete tables on all financial markets–New York Stock Exchange and American Stock Exchange transactions, over-the-counter securities, foreign securities markets, commodities, options, mutual funds, and other publicly traded financial instruments. The tables of daily transactions in stocks include such information as the price/earnings ratio for each stock, dividend yield, daily volume of trading in the stock, the high and low for the day, and other similar information. The
Journal
is available by subscription. Most newsstands carry the
Journal, and many public libraries have a subscription to it. You can also read
WSJ Online
(www.online.wsj.com).
Investor’s Business Daily
The
Investor’s Business Daily
is another daily business newspaper. Like
The Wall Street Journal, it is published five days a week and has extensive financial tables covering the daily transactions in virtually every securities market. Unlike the
Journal, however,
Investor’s Business Daily
tends to have fewer general news articles and business-news stories. For this reason, some investors find it a faster read than the
Journal. You can read
Investor’s Business Daily
online (
www.investors.com).
Financial magazines, journals, and newsletters
In addition to
TheWall Street Journal
and
Investor’s Business Daily, hundreds of financial magazines, journals, and newsletters are published weekly, monthly, or on some other periodic basis. The three largest business magazines in circulation are
Forbes,
Fortune, and
Business Week. Each has general business-news stories, articles on individual companies, columns on personal finance, and other types of news. In addition to these general business-news magazines, there are more specifically focused magazines such as
Money
or
Personal Finance.
Journals such as
Barron’s
(a sister publication of
The Wall Street Journal) are also available.
Barron’s, for example, hits the newsstands every Saturday morning. Like
The Wall Street Journal, it has complete tables of all securities transactions for the past week and articles about investing. Other sources of investment research are published by individuals or by the large business-publishing companies. You can find newsletters that cover virtually every aspect of investing–
stocks,
bonds,
real estate,
mutual funds,
gold,
collectibles, and other areas.
Radio and television
In addition to the printed sources of financial information, several radio and TV programs are oriented toward the markets and investing. Check your local directory for dates and times. Also, numerous radio stations carry business news during the course of the day. Almost every major city has all-news radio stations with continuous updates on financial markets and business news.
Internet
Numerous Internet sites are devoted to business and investment information. Most, if not all, of the major Internet providers have sites devoted to the stock market, personal financial planning, tax planning, and other business interests. With any one of these Internet providers, you can receive stock quotes during the course of the day (usually delayed 10 or 15 minutes). You can also access financial information about a company (e.g., earnings per share, price/earnings ratio, book value, charts of past price movements) and follow the daily ups and downs of the individual markets (e.g., New York Stock Exchange, American Stock Exchange, NASDAQ).
In addition, virtually every publicly traded company now has its own website. Most companies post their annual report on their website and provide you with different types of information about the company. For example, if you were interested in investing in Microsoft, you could go into its website and get an incredible amount of news and information about the company.
You should also check out the Securities and Exchange Commission’s website–all publicly traded companies must file quarterly and annual financial reports (10-Qs, 10-Ks, and annual reports). These are posted on the SEC’s website (
www.sec.gov). If you have access to the Internet, you should spend time exploring various sites related to the stock market and investing.
Brokerage firms and mutual fund companies
Brokerage firms are another excellent source of investment research information. Almost all midsize and large brokerage companies have staffs of investment analysts who follow the various publicly traded companies and industries in our economy. The analysts are continually preparing new and updated research reports on these companies and industries. Most brokerage firms will make these research reports available to individuals who request them. Often, there will be ads in business publications such as
The Wall Street Journal
inviting people to send for a particular research report on a company or industry (you can expect a call from one of their brokers or account executives soon after you receive the mailing). Most firms use this type of ad to prospect for new clients, which is why they request that you provide your phone number on the application form.
Another good source of investment information is the mutual fund industry. Almost all of the large mutual fund companies produce numerous brochures and reports on all aspects of investing. The companies will usually make these reports available to anyone who requests them. A good place to begin your research is to review the ads in a business publication such as
The Wall Street Journal
–most large mutual fund companies have ads making their investment reports available to the public.
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