Sources of Investment Information

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Chapter 2

• Sources of Investment Information

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CHAPTER 2 OUTLINE

• 2.1 Ways of Wall Street
• 2.2 Internet Revolution
• 2.3 Investment Information on the Internet
• 2.4 Financial Press
• 2.5 Wall Street Research
• 2.6 Investments as a Profession

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KEY TERMS

• Chartist/Technician
• Head and Shoulders
• Stock Quotes
• Real Time
• EDGAR
• Ticker Symbol
• 10Q Report
• 10K Report
• Proxy Statements

• SEC Form 144
• Stock Message Board
• Bullish/Bearish
• Stock Broker
• Security Analyst
• Portfolio Managers
• Certified Investment Planner
• Investment Banker

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Ways of Wall Street

• Caveat Emptor (Let the Buyer Beware)
• Where Are the Customers Yachts?

• Neither the Advice nor the Wisdom on Wall Street
  is free

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WHAT DID THEY SAY?? Wall Street Internet Jargon

• Trader Terms
• Internet Terms
• Technicians Terms
• Financial and Investing Glossaries on the
  Internet
• t.html

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TECHNICIANS or CHARTISTS

• Pick stocks based on patterns of past price and
  volume data--e.g., head and shoulders
  formation--bearish indicator
• Head and Shoulders Chart formation resembling
  the head and shoulders outline of a person.
• Technical trends can move markets in short term,
  but fundamentals count in longer term
• Tend to look at day-to-day stock movements, often
  with 20/20 hindsight

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Internet Revolution

• Widespread dissemination of information
• Two-way communication
• Cheaper and more timely than print sources

• Makes financial markets more democratic
• Reduces information-gathering costs
• Can be fertile space for stock price manipulation
  and fraud

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THE INTERNETSo Powerful, It Brings Down Walls

• With a click of the mouse
• consumer news
• attitudes
• impressions
• ideas
• variety of new products and services
• Enemy of despots and dictators

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E-commerce and the Internet

• Tool for Consumers

• Tool for Companies

Ready information is enemy of high prices and
high profit margins as consumers shop via the net

• Reduce prices
• Get closer to customers
• Find out how to meet and exceed customer needs

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Financial Informationon the Internet

• Stock Quotes in Real Time
• Volume Information
• Financial Data on
• Companies
• Industries
• U.S. Economy
• World events

• Quotes
• Charts
• News
• SEC Filings
• Stock Research Reports
• Earnings Estimates
• Fundamentals

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WHO IS EDGAR?

• Electronic retrieval analysis for SEC filings
• Free website for gov. reports filed by individual
  companies

• For-profit company that supplies investors with
  SEC reports and filings
• Ticker symbol unique 2,3,or 4 letter code for
  company

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SEC REQUIRES

• 10Q Quarterly Accounting Information
• 10K Annual Accounting Information
• 13D 5 Ownership Positions
• Form 144 Intention to Sell Restricted Stock

• Proxy statement or annual meeting announcement
• Members of top management
• Board of directors
• Large investors
• Stock ownership positions by managers
• Pay-for-performance incentives

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REAL TIME QUOTES

• Fast-moving markets
• Up-to-the-minute quotes and news
• Free quote information

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MUTUAL FUND INFORMATION

• Morningstarwatchdog group for mutual fund
  industry
• Comprehensive, timely information and analysis
• Information on sector funds

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STOCK MESSAGE BOARDS

• Websites for anonymous individuals to post
  information about companies or investments
• Timely information about what other investors are
  thinking
• Can be manipulated via misinformation, rumor, and
  gossip

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FINANCIAL PRESS

• Financial Newspapers
• The Wall Street Journal (print interactive
  versions)
• Investors Business Daily
• New York Times
• San Francisco Chronicle
• USA Today

• Financial Periodicals
• Barrons,Business Week
• Forbes
• Fortune
• Inc.
• Money
• Worth

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WALL STREET RESEARCHAnalyst Opinion Summaries

• Wall Street trading firms opinions
• Detailed information about
• Companies
• Industries
• Overall Economy
• Global Stock and Bond Markets
• Buy/sell recommendations
• Bullish Consensus
• Bearish Sentiment

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WALL STREET RESEARCHCompany Reports

• Company Reports
• Industry Reports
• U.S. Market Outlook
• Global Outlooks

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Investments As a ProfessionFinancial Job Market
Overview

• Employment opportunities in financial services
  expected to grow rapidly
• Amount of financial sophistication demanded of
  finance specialists and nonspecialists expected
  to rise
• Corporate Treasurers/CFOs
• Personnel/Human Resources
• Boundaries between investment and financial
  instruments continue to blur-- more account
  executives in
• Commercial banks
• savings institutions
• insurance carriers
• real estate companies

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CAREER OPPORTUNITIESStock Brokers Investment
Managers

• Stock Brokerage financial agents who act as
  go-betweens for individual buyers and sellers
• Investment Management
• Security Analysts specialists who identify
  investment opportunities for individuals
• Portfolio Managers manage investments for
  individuals and institutions

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CAREER OPPORTUNITIESFinancial Planners

• Help individuals identify and meet financial
  goals
• Certified Financial Planners must pass
  challenging exams from College of Financial
  Planning--equivalent to CPA
• financial plan processing and insurance
• investment planning
• income tax planning
• retirement planning/employee benefits
• estate planning

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CAREER OPPORTUNITIESInvestment Banking

• Help corporate clients meet financial needs, such
  as issuing stocks or bonds
• Arrange to sell new securities to general public
• Arrange mergers and acquisitions

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Review Quiz

• T or F
• Technical analysts generally consider a head and
  shoulders formation to be a very bullish
  indication.
• T or F
• EDGAR is a nonprofit company that specializes in
  providing investor access to SEC reports and
  filings.
• T or F
• SEC Form 144 filings must only be submitted by
  holders of restricted securities, sometimes
  called letter stock, after they have sold such
  shares to the general public.

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Review Quiz

• T or F
• A bearish consensus means that Wall Street
  analysts expect a stock price to go down.
• T or F
• An initial 13D filing would typically be regarded
  as bearish.
• T or F
• Stock trading on the Internet is likely to reduce
  stock-market volatility.