Investing in Your 20s & 30s For Dummies by Eric Tyson

Author:Eric Tyson
Language: eng
Format: epub
Publisher: Wiley
Published: 2012-11-19T16:00:00+00:00

Researching individual stocks

When investing in stocks, I think you’re better off sticking to mutual funds and ETFs. In Chapter 10, I dive into far more detail about how to do just that. However, I realize that you may be interested in picking some stocks on your own.

You can spend hundreds of hours researching and reading information on one company alone. Therefore, unless you’re financially independent and want to spend nearly all your productive time investing, you need to focus on where you can get the best bang for your buck and time:

The Value Line Investment Survey: Value Line is an investment research company. Value Line’s securities analysts have been tracking and researching stocks since 1931. Its analysis and recommendation track record is quite good, and its analysts are beholden to no one. Many professional money managers use the Value Line Investment Survey, Value Line’s weekly newsletter, as a reference because of its comprehensiveness. Value Line condenses the key information and statistics about a stock and the company behind the stock to a single page.

Independent brokerage research: If you’re going to invest in individual stocks, you need a brokerage account. In addition to offering low trading fees, the best brokerage firms allow you to easily tap into useful research, especially through the firm’s website, that you can use to assist with your investing decisions. Because discount brokers aren’t in the investment-banking business of working with companies to sell new issues of stock, discount brokers have a level of objectivity in their research reports that traditional brokers (ones like Merrill Lynch, Morgan Stanley, and so on) often lack. Some discount brokers, such as Charles Schwab, produce their own highly regarded research reports, but most discount brokers simply provide reports from independent third parties.

Successful money managers’ stock picks: To make money in stocks, you certainly don’t need an original idea. In fact, it makes sense to examine what the best money managers are buying for their portfolios. Mutual fund managers, for example, are required to disclose at least twice a year what stocks they hold in their portfolios. You can call the best fund companies and ask them to send their most recent semiannual reports that detail their stock holdings, or you can view those reports on many fund companies’ websites. Through its website, Morningstar (www.morningstar.com) allows you to see which mutual funds hold large portions of a given stock that you may be researching and what the success or lack thereof is of the funds that are buying a given stock. Finally, you can follow what Warren Buffett’s and other successful investors’ funds are buying by visiting the Securities and Exchange Commission website at www.sec.gov and looking up specific investment funds’ holdings.

Financial publications and websites: Many publications and websites cover the world of stocks. But you have to be careful: Just because certain columnists or publications advocate particular stocks or investing strategies doesn’t mean that you’ll achieve success by following their advice. Publications offering useful columns and commentary,

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