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Chapter 4

Chapter 4. Sources of Information. Information. Investors need information but information itself can not produce investment decisions Being informed will not necessarily lead to superior investment results. Corporate Sources. Annual reports to stockholders 10K and 10Q reports

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Chapter 4

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  1. Chapter 4 Sources of Information

  2. Information • Investors need information but information itself can not produce investment decisions • Being informed will not necessarily lead to superior investment results

  3. Corporate Sources • Annual reports to stockholders • 10K and 10Q reports • Insider transactions: 13-D report • News releases

  4. Public Relationship Material • Much information released is public relationship material • To conform to full disclosure laws, firms may release • too much information • information that is of little use to investors

  5. The Importance of • Financial statements • Reports of insider transactions

  6. Brokerage Firms' Research Reports • Recommendation tend to follow a general pattern: • buy • hold • sell • Possible variations such as strong buy

  7. Brokerage Firms’ Research Reports • Reports may be • self-serving • biased towards encouraging security purchases

  8. Business Publications • The Wall Street Journal • Barron's • Media General Financial Weekly • Business Week • Forbes • Fortune

  9. More Specialized Investment Publications • Financial Planning • Journal of Financial Planning • AAII Journal (American Association of Individual Investors)

  10. General Investment Advisory Services • Mergent's Manuals • Standard & Poor's Corporation Records • Standard & Poor's Stock Guide • Value Line Investment Survey

  11. Specialized Investment Advisory Services • A plethora of advisory services are available • Following an advisory service does not necessarily lead to consistently higher investment returns • The Hulbert Financial Digest rates performance of over 150 investment advisory services

  12. Socially Responsible Investing • Requires defining socially responsible investment • Following one's conscience need not lead to inferior results

  13. Other Sources of Investment Information • Federal government publications • Federal Reserve publications • Investment clubs • Adult education courses

  14. Information in an Efficient Markets Context • Importance of financial planning • Need to determine investment goals • Need to develop an investment strategy • But not necessarily superior or inferior performance

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