CHAPTER TEN GATHERING INVESTMENT INFORMATION Practical Investment Management Robert A. Strong

South-Western College Publishing © Outline  Research Philosophy  Know Thyself  Screening  Resources at the Library  Standard & Poor’s Publications  Moody’s Publications  Company Information  Annual Reports  SEC Filings  The Prospectus

South-Western College Publishing © Outline  Investment Letters  Advisory Letters  The Popular Press  Computer Services  Screening Services  On-Line Computer Services  Seminars  Brokerage Firms  Bank Trust Departments  Employee Relation Programs  Exchange Seminars

South-Western College Publishing © Research Philosophy  Before conducting any research, decide what kind of information will be useful.  Know thyself : Knowing their own attitudes toward various issues can be a big help in allowing investors to make productive use of their research time. E.g. fundamental analysis, technical analysis, the experts’ approach.  Screening is the process of sorting through the list of potential investments.

Categories of Investment Information South-Western College Publishing © Standard & Poor’s Moody’s Library Reference Material Annual Reports SEC Submissions Prospectus Company Material Advisory Popular Press Investment Services Screening On-Line Data Computer Services Brokerage Firms Bank Trust Departments Employee Relations Exchange Seminars

South-Western College Publishing © Resources at the Library Standard & Poor’s and Moody’s publish easy-to-use reference material that can be found in most public libraries.

South-Western College Publishing ©  Standard & Poor’s Publications - monthly stock guide - quarterly company stock report - monthly bond guide - weekly Outlook (with highlights, summary opinions and statistics) - stock market encyclopedia (S&P 500 stock reports) - earnings forecaster (compilation of estimates) - annual corporation records with daily updates Resources at the Library

South-Western College Publishing ©  Moody’s Publications - detailed manuals - weekly dividend record - bond record - weekly bond survey - quarterly handbook of common stock Resources at the Library

South-Western College Publishing © Company Information  Annual reports contain corporate statements about the results of the previous year as well as the prospects for the future. Numerous audited publications are required for publicly traded firms.

South-Western College Publishing ©  SEC filings - 10-K report (annual report) - 10-Q report (quarterly report)  The prospectus outlines the terms of the intended transaction, e.g. issue of new debt securities Company Information

South-Western College Publishing © Investment Letters Investors often consider publications that make investment recommendations or forecasts.  Advisory letters offer specific investment recommendations. - Value Line Investment Survey (with timeliness and safety rankings) - Institutional Broker’s Estimate Survey (I/B/E/S) - Zack’s Corporate Earnings Estimator - research information from brokerage firms

South-Western College Publishing © Investment Letters  The popular press offer more general information, although recommended investor behavior may still be suggested. - The Wall Street Journal - Barron’s (weekly) - Investors Daily - Forbes (twice monthly) - Smart Money - other magazines - television programs

South-Western College Publishing © Computer Services - Value Screen III - Morningstar U.S. Equities on Floppy - Compustat - CRISP tapes - Standard & Poor’s Stockpak - Expanded Academic Index - Disclosure  Screening services use static databases with periodic updates.

South-Western College Publishing © Computer Services - CompuServe, Prodigy, and America On-Line - Dow Jones News Retrieval System - S&P Online - the Internet e.g. the U.S. government’s EDGAR database  On-line computer services are dynamic with continuous updates.

South-Western College Publishing © Seminars  Local brokerage firms often hold educational seminars for their current and prospective customers.  Bank trust departments also hold seminars.  Some employee relation programs provide investment information to boost employee morale.  The securities exchanges offer education sessions too.

South-Western College Publishing © Review  Research Philosophy  Know Thyself  Screening  Resources at the Library  Standard & Poor’s Publications  Moody’s Publications  Company Information  Annual Reports  SEC Filings  The Prospectus

South-Western College Publishing © Review  Investment Letters  Advisory Letters  The Popular Press  Computer Services  Screening Services  On-Line Computer Services  Seminars  Brokerage Firms  Bank Trust Departments  Employee Relation Programs  Exchange Seminars