Alpha Teach Yourself Investing in 24 Hours: An Analysis (part 47)

Picking a Stock (part B)

by

Charles Lamson

Research Without the Internet

If you chose not to use the Internet, or simply do not have access to it, there are other ways to research companies for investment.

One of the best tools available is called the Value Line Investment Survey. Value Line publishes this comprehensive research tool: you can usually find a copy at your local library.

The Value Line staff digests tons of information about publicly traded companies and presents it on a single page for easy reference. All the numbers and ratios we will discuss shortly are contained in this summary, as well as important information that describes the business.

The Value Line service is expensive, but if you are going to be an active trader and do not want to use Internet resources, this is the tool you need.

JUST A MINUTE You will find helpful information about investing at the public library in the reference section.

Tons of Information

There is even more information available for free from individual companies. If you find a company you are interested in knowing more bout, the next step is to gather some additional information.

If you are using Value Line, this step is still more important and, even if you are using the Internet, follow this step for a couple of companies just to get the feel of what is available. You may find that digesting the traditional printed word is easier than reading off your computer screen or printing out everything you are interested in.

Companies will send you annual reports along with other documents they are required to produce for investors. You do not need these to buy the company's stock in the open market, but they contain a wealth of information that will be available in your research. If you do not know how to reach the company, call the exchange the stock is listed on for the number.

You can also go to the Internet site; many will let you order annual and quarterly reports online.

TIME SAVER Companies are eager to share information with you. For one thing, they are rquired to make most of the information you need available to the public. You do not need to own the stock before requesting this information.

The Wall Street Journal offers a free service that allows you to order annual reports on selected companies. If you look through their listings, you will see that some stocks have a clover-shaped character next to the listing.

You can order annual reports on these companies using a 1-800 number. The Journal claims the reports will be shipped the next working day.

The Annual Report

The annual report is one of several documents the company is required to publish and make available to the public. It is the one that is most often adorned with glossy, color photographs of happy customers, happy workers, happy management, and happy machinery. It projects the company as one big, happy family.

The really important part of the annual report may tell another story, but up front the management will put on their Sunday best to impress current and potential shareholders.

While the up-front material may be forgiven for being a shameless sales job, the financial information inside must adhere to rigid financial and accounting standards. The statements must be audited and prepared by an accredited accounting firm that will testify to their veracity and note any irregularities in accounting or management procedures.

*ALPHA TEACH YOURSELF INVESTING IN 24 HOURS, 2000, KEN LITTLE, PGS. 272-274*

END

JUST A MINUTE

You will find helpful information about investing at the public library in the reference section.

TIME SAVER

Companies are eager to share information with you. For one thing, they are rquired to make most of the information you need available to the public. You do not need to own the stock before requesting this information.