Market Research

Surfing for objective information

The Internet is the democratization of information. Never before has so much been available to so many for so little.

It used to be that if you wanted to research a stock, you went to the public library and searched through the Value Line survey, hoping that your stock would be there. If it wasn't, you phoned or wrote the company and requested that they send you their investor package: an annual report, a couple of 10Qs and some press releases. If you were lucky, they threw in a research report or two. That was the extent of it.

Today you have several options to explore when researching a stock. These include:

  • Investment websites Smart Money, Yahoo Finance, Morningstar and CNBC: This is a good place to start. Many of these sites have stock screening tools that can weed out those stocks you're definitely not interested in.
  • Investment Blogs: Some we like include Blogging Stocks, Footnoted.org, Seeking Alpha (a blog aggregator), The Money Blogs(another blog aggregator), Make Love, Not Debt and Crossing Wall Street. People outside the financial industry write some of these.
  • Investment reports from your broker's financial analysts: Usually a broker, discount or full-service, will provide you with in-house research either online or through the mail.
  • Business television stations like CNBC and Fox: These provide fast-paced investment analysis throughout the day including many guests from the investment industry.
  • Talk radio: Same general format as on television.
  • All documents filed with the Securities Exchange Commission: Find the 10-K you're looking for online.
  • Investment clubs both online and off: Being a part of an investment club will require that you provide your own research for your stock recommendations. Conversely, you will receive other research from your fellow members on their picks.
  • E-mail newsletters: Many websites have free e-mail newsletter subscriptions. Keep in mind they're usually doing this to sell you a service that isn't free.
  • Investment analysis from independent organizations like Argus Research: Sarbanes-Oxley has created the need for independent, unbiased investment research. If your broker will provide some, it's a valuable industry source.
  • Vector Vest and other investment research software: These are modern-day versions of Value Line. Value Line still exists today and is doing a fantastic job.
  • Investment newspapers likeInvestors Business Daily: Focused less on business and more on investment news, it's a great source of ideas for growth companies especially.
  • Standard & Poor's stock guides and other books recommending specific stocks: More and more, publishers are putting out annual guides to the best stocks to invest in. Granted, the information does go out of date quickly. However, it's still a good source for ideas.
  • Take a trip to the mall: This is the old Peter Lynch trick. Spot the busiest stores and find out if they're publicly traded.

With more information available, you would think your job would become easier. In fact, it makes your job more difficult. All this takes time to read and understand. Once that's done, you have to tease out the winners from the losers and come to some sort of decision as to those companies you'd like to invest in. It's a time-consuming process but once you've done it, you'll have very little left to do.

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