Chapter 2

Sources of Investment Sources of Investment InformationInformation

CHAPTER 2 OUTLINE

2.1 2.1 Ways of Wall StreetWays of Wall Street

2.2 2.2 Internet RevolutionInternet Revolution

2.3 2.3 Investment Information on the InternetInvestment Information on the Internet

2.42.4 Financial PressFinancial Press

2.5 2.5 Wall Street ResearchWall Street Research

2.6 2.6 Investments as a ProfessionInvestments as a Profession

KEY TERMS

Chartist/TechnicianChartist/Technician Head and ShouldersHead and Shoulders Stock QuotesStock Quotes Real TimeReal Time EDGAREDGAR Ticker SymbolTicker Symbol 10Q Report10Q Report 10K Report10K Report Proxy StatementsProxy Statements

SEC Form 144SEC Form 144 Stock Message BoardStock Message Board Bullish/BearishBullish/Bearish Stock BrokerStock Broker Security AnalystSecurity Analyst Portfolio ManagersPortfolio Managers Certified Investment Certified Investment

PlannerPlanner Investment BankerInvestment Banker

Ways of Wall Street

Caveat Emptor (Let the Caveat Emptor (Let the Buyer Beware)Buyer Beware)

““Where Are the Where Are the Customers’ Yachts?”Customers’ Yachts?”

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

WHAT DID THEY SAY??

Wall Street & Internet Jargon

Trader TermsTrader Terms

Internet TermsInternet Terms

Technician’s TermsTechnician’s Terms

Financial and Investing Glossaries on the Internet:Financial and Investing Glossaries on the Internet:

<<http://http://www.matisse.net/files/glossary.htmlwww.matisse.net/files/glossary.html>>

<<http://http://www.siliconinvestor.com/misc/glossary/alist.htmlwww.siliconinvestor.com/misc/glossary/alist.html>>

TECHNICIANS or CHARTISTS

Pick stocks based on patterns of Pick stocks based on patterns of past price and volume data--e.g., past price and volume data--e.g., “head and shoulders” “head and shoulders” formation--bearish indicatorformation--bearish indicator

Technical trends can move Technical trends can move markets in short term, but markets in short term, but fundamentals count in longer fundamentals count in longer termterm

Tend to look at day-to-day stock Tend to look at day-to-day stock movements, often with 20/20 movements, often with 20/20 hindsighthindsight

Internet Revolution

Widespread Widespread dissemination of dissemination of informationinformation

Two-way Two-way communicationcommunication

Cheaper and more Cheaper and more timely than print sourcestimely than print sources

Makes financial markets Makes financial markets more democraticmore democratic

Reduces information-Reduces information-gathering costsgathering costs

Can be fertile space for Can be fertile space for stock price manipulation stock price manipulation and fraudand fraud

THE INTERNETSo Powerful, It Brings Down Walls

With a click of the mouse:With a click of the mouse: consumer newsconsumer news attitudesattitudes impressionsimpressions ideasideas variety of new products and servicesvariety of new products and services

Enemy of despots and dictatorsEnemy of despots and dictators

E-commerce and the Internet

Tool for ConsumersTool for Consumers Tool for CompaniesTool for Companies

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

Reduce pricesReduce prices

Get closer to customersGet closer to customers

Find out how to meet and Find out how to meet and exceed customer needsexceed customer needs

Financial Informationon the Internet

<<http://http://cbs.marketwatch.comcbs.marketwatch.com>> <<http://http://www.dailystocks.comwww.dailystocks.com>>

Stock Quotes in Real TimeStock Quotes in Real Time

Volume InformationVolume Information

Financial Data on:Financial Data on:

CompaniesCompanies

IndustriesIndustries

U.S. EconomyU.S. Economy

World eventsWorld events

QuotesQuotes

ChartsCharts

NewsNews

SEC FilingsSEC Filings

Stock Research ReportsStock Research Reports

Earnings EstimatesEarnings Estimates

FundamentalsFundamentals

WHO IS EDGAR?

<<http://www.edgar-online.comhttp://www.edgar-online.com>>

Electronic retrieval analysis for SEC filingsElectronic retrieval analysis for SEC filings

Free website for gov. reports filed by individual companiesFree website for gov. reports filed by individual companies

For-profit company that supplies For-profit company that supplies investors with SEC reports and filingsinvestors with SEC reports and filings

Ticker symbol: unique 2,3,or 4 letter Ticker symbol: unique 2,3,or 4 letter code for companycode for company

SEC REQUIRES

10Q:10Q: Quarterly Accounting Quarterly Accounting InformationInformation

10K:10K: Annual Accounting Annual Accounting InformationInformation

13D:13D: 5% Ownership 5% Ownership PositionsPositions

Form 144:Form 144: Intention to Sell Intention to Sell Restricted StockRestricted 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

REAL TIME QUOTES

<<http://http://freerealtime.comfreerealtime.com>>

Fast-moving marketsFast-moving markets

Up-to-the-minute quotes and newsUp-to-the-minute quotes and news

Free quote informationFree quote information

MUTUAL FUND INFORMATION

<<http://http://www.morningstar.comwww.morningstar.com>>

Morningstar—watchdog Morningstar—watchdog group for mutual fund group for mutual fund industryindustry

Comprehensive, timely Comprehensive, timely information and analysisinformation and analysis

Information on sector Information on sector fundsfunds

STOCK MESSAGE BOARDS

Websites for anonymous individuals to post Websites for anonymous individuals to post information about companies or investmentsinformation about companies or investments

Timely information about what other investors are Timely information about what other investors are thinkingthinking

Can be manipulated via misinformation, rumor, and Can be manipulated via misinformation, rumor, and gossipgossip

<<http://quote.yahoo.comhttp://quote.yahoo.com>>

FINANCIAL PRESS

Financial Newspapers:Financial Newspapers:

The Wall Street Journal The Wall Street Journal (print & interactive (print & interactive versions)versions)

Investor’s Business DailyInvestor’s Business Daily

New York TimesNew York Times

San Francisco ChronicleSan Francisco Chronicle

USA TodayUSA Today

Financial Periodicals:Financial Periodicals:

Barron’s,Business WeekBarron’s,Business Week

ForbesForbes

FortuneFortune

Inc.Inc.

MoneyMoney

WorthWorth

WALL STREET RESEARCH

Analyst Opinion Summaries

Wall Street trading firms’ opinionsWall Street trading firms’ opinions Detailed information about:Detailed information about:

CompaniesCompanies Industries Industries Overall EconomyOverall Economy Global Stock and Bond MarketsGlobal Stock and Bond Markets

Buy/sell recommendationsBuy/sell recommendations Bullish ConsensusBullish Consensus Bearish SentimentBearish Sentiment

WALL STREET RESEARCH

Company Reports

Company ReportsCompany Reports

Industry ReportsIndustry Reports

U.S. Market OutlookU.S. Market Outlook

Global OutlooksGlobal Outlooks

Investments As a ProfessionFinancial Job Market Overview

Employment opportunities in financial services expected to Employment opportunities in financial services expected to grow rapidlygrow rapidly

Amount of financial sophistication demanded of finance Amount of financial sophistication demanded of finance specialists and nonspecialists expected to risespecialists and nonspecialists expected to rise Corporate Treasurers/CFOsCorporate Treasurers/CFOs Personnel/Human ResourcesPersonnel/Human Resources

Boundaries between investment and financial instruments Boundaries between investment and financial instruments continue to blur--> more account executives incontinue to blur--> more account executives in Commercial banksCommercial banks savings institutionssavings institutions insurance carriersinsurance carriers real estate companies real estate companies

CAREER OPPORTUNITIESStock Brokers & Investment Managers

Stock Brokerage:Stock Brokerage: financial agents who act as financial agents who act as go-betweens for individual buyers and sellersgo-betweens for individual buyers and sellers

Investment ManagementInvestment Management

Security Analysts:Security Analysts: specialists who identify specialists who identify investment opportunities for individualsinvestment opportunities for individuals

Portfolio Managers:Portfolio Managers: manage investments for manage investments for individuals and institutionsindividuals and institutions

CAREER OPPORTUNITIESFinancial Planners

Help individuals identify and meet financial goalsHelp individuals identify and meet financial goals

Certified Financial Planners:Certified Financial Planners: must pass challenging exams must pass challenging exams from College of Financial Planning--equivalent to CPAfrom College of Financial Planning--equivalent to CPA

financial plan processing and insurancefinancial plan processing and insurance

investment planninginvestment planning

income tax planningincome tax planning

retirement planning/employee benefitsretirement planning/employee benefits

estate planningestate planning

CAREER OPPORTUNITIES

Investment Banking

Help corporate clients meet Help corporate clients meet financial needs, such as financial needs, such as issuing stocks or bondsissuing stocks or bonds

Arrange to sell new securities Arrange to sell new securities to general publicto general public

Arrange mergers and Arrange mergers and acquisitionsacquisitions