Other Information Sources

One of the great benefits to participating in the American stock market is the abundance of high-quality information. You should never have reason to complain that it is difficult to find the information you need, that information is highly unreliable, or that a variety of opinions is not at your fingertips. The abundance also is a problem.

With such an abundance of information, your great challenge lies not in finding information, but in deciding which information to use, to rely on, and to incorporate into your program. In addition to the excellent financial newspapers available through subscription, in your local library, or on the Internet, you also can access numerous magazines and newsletters.

Magazines should be divided into several categories, because they do not all offer the same range of information. First are magazines published to emphasize corporate financial news. While discussion includes the fundamentals, the economy, and the stock market, the real emphasis is not on investing, but on how corporations are affected by changes in the economy, by politics, and by other domestic and international influences. These magazines are educational for broad overviews, but will not provide you with any specific information about fundamentals, investment skills and strategies, or insights into how the markets work—the kind of information most avid investors seek. These magazines may provide valuable background, but you should read them in your local library before deciding whether to subscribe. The most prominent among these are Forbes (800-888-9896 or Web site forbes.com) and Fortune (800-621-8000 or Web site: pathfinder.com/fortune).

A second category of magazines is the how-to classification. These magazines include those that offer investment advice and ideas from the highly technical to the trendier consumer-oriented publication. Typical features are profiles of average families and how they manage their monies, informative articles about specific investments, and basic consumer information for beginners. The list of magazines in this grouping is so long that none are listed specifically.

Yet another source worth considering is the newsletter field. Hundreds of investment newsletters are available and some services even offer trial subscriptions to dozens at a time, all for one fee. Generally, this method takes a lot of time and leads to little of real substance. Check the Internet, which itself might offer a more updated and informative source than any single subscription. However, some newsletters might provide you with valuable information, all depending on what you are seeking. Check with other investors, stockbrokers, financial planners, and other experts to determine which newsletters meet your exact needs. Find out about getting sample issues or a limited trial subscription, or find a copy at your library before subscribing.

Another potential source of fundamental information is the financial expert. This individual may be found using any of several names, such as financial planner, registered investment adviser, or stockbroker. Some financial experts might be able to supply you with the latest annual reports or financial statements for companies you are targeting; stockbrokers have access to the entire research department of their firm, which can be a valuable source for information.

A word of caution when using financial experts as sources: Remember that these individuals are paid for their services, either by a fee or, more often, on a commission basis. Thus, they make a living only if and when you execute a transaction. Even the best of commission-based salespeople cannot ignore this basic motive. You should never overlook this reality. Be especially wary if any adviser makes suggestions for how to invest without first knowing your personal financial situation, goals, and risk tolerance level.

The problems for many forms of research supplied through salespeople—even when it comes from a nationally known brokerage firm—is that the conclusions and advice often are geared toward short-term decision making. Emphasis is placed on forecasts of sales and profits levels, rather than insightful fundamental analysis. It comes down to the same problem every investor faces: needing the fundamentals but being distracted by technical analysis, guesswork, index watching, and the short-term prediction game.