1 Chapter Four Sources of Investment Information McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

11

Chapter Four

Sources of Investment Information

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved.

22

Aggregate Economic DataAggregate Economic Data

Federal Reserve BulletinFederal Reserve Bulletin Federal Reserve BanksFederal Reserve Banks Survey of Current BusinessSurvey of Current Business Websites and Economic DateWebsites and Economic Date Other Sources of Economic DataOther Sources of Economic Data

33

Federal Reserve BulletinFederal Reserve BulletinPublished MonthlyPublished Monthly

Domestic Financial StatisticsDomestic Financial Statistics Federal Reserve BanksFederal Reserve Banks Monetary and Credit AggregatesMonetary and Credit Aggregates Commercial Banks Commercial Banks Financial MarketsFinancial Markets Federal FinanceFederal Finance Securities Markets and Corporate FinanceSecurities Markets and Corporate Finance

44

Federal Reserve Bulletin Federal Reserve Bulletin contcont..

Real EstateReal Estate Consumer Installment CreditConsumer Installment Credit Domestic Nonfinancial StatisticsDomestic Nonfinancial Statistics International StatisticsInternational Statistics Securities Holdings and TransactionsSecurities Holdings and Transactions Interest and Exchange RatesInterest and Exchange Rates

www.federalreserve.gov

55

12 Federal Reserve Banks12 Federal Reserve Banks

66

Federal Reserve Bank of St. LouisFederal Reserve Bank of St. LouisComprehensive Economic StatisticsComprehensive Economic Statistics

U.S. Financial Data U.S. Financial Data Monetary TrendsMonetary Trends International Economic TrendsInternational Economic Trends National Economic TrendsNational Economic Trends

www.stlouisfed.org/default.html

77

Federal Reserve Economic Data Federal Reserve Economic Data (FRED)(FRED)

Historical financial dataHistorical financial data Historical economic data Historical economic data Monthly reservesMonthly reserves Interest ratesInterest rates Commercial banking dataCommercial banking data Gross domestic product (GDP)Gross domestic product (GDP) Regional economic dataRegional economic data

88

Survey of Current BusinessSurvey of Current Business

Published monthly Published monthly Bureau of Economic Analysis of the U.S. Department Bureau of Economic Analysis of the U.S. Department

of Commerceof Commerce Major outlet for economic time series dataMajor outlet for economic time series data Extremely helpful for industry analysisExtremely helpful for industry analysis Excellent statisticsExcellent statistics Great details and sub-categories, exampleGreat details and sub-categories, example

• Lumber, production statistics Lumber, production statistics HardwoodsHardwoods SoftwoodsSoftwoods

• Douglas fir treesDouglas fir trees• Southern pineSouthern pine• Western pineWestern pine

http://www.bea.gov/beahome.html

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Survey of Current Business Survey of Current Business cont.cont.

GDP, GNPGDP, GNP Consumer price index Consumer price index (CPI)(CPI)

National incomeNational income Production price indexProduction price index

Personal incomePersonal income Construction put in placeConstruction put in place

Industrial productionIndustrial production BankingBanking

Housing starts and permitsHousing starts and permits Consumer installment creditConsumer installment credit

Retail tradeRetail trade Stock pricesStock prices

Labor force, Labor force, unemployment, & earningsunemployment, & earnings

Value of export & importsValue of export & imports

Manufacturers’ shipments, Manufacturers’ shipments, inventories, & ordersinventories, & orders

Motor vehiclesMotor vehicles

List of major series updatesList of major series updates

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Websites and Economic DataWebsites and Economic Data

Websites Websites CommentsComments

www.economy.comwww.economy.com

Free & fee-based research onFree & fee-based research on EconomyEconomy FinanceFinance CountryCountry IndustryIndustry

www.economy.com/dismalwww.economy.com/dismal

Offers comprehensive & timely Offers comprehensive & timely analysis & dataanalysis & data Covers 180 economic Covers 180 economic indicators for 40 different indicators for 40 different countriescountries

1111

Websites and Economic DataWebsites and Economic Data

Websites Websites CommentsComments

www.economagic.comwww.economagic.com

Comprehensive site of free and Comprehensive site of free and easily availableeasily available Economic time series dataEconomic time series data

100,000 time series100,000 time series Customizable reportsCustomizable reports Access to data in Excel formatAccess to data in Excel format Check their “Most Frequently Check their “Most Frequently Requested Series”Requested Series”

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Other Sources of Other Sources of Economic DataEconomic Data

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CommentsCommentsWebsites Websites

Economic Report of the President:Economic Report of the President: Current and foreseeable trends and annual numerical Current and foreseeable trends and annual numerical goals concerning topics such as goals concerning topics such as

• EmploymentEmployment• ProductionProduction• Real incomeReal income• Federal budget outlaysFederal budget outlays

Employment objectives for significant groups of the Employment objectives for significant groups of the

the labor forcethe labor force Annual numeric goalsAnnual numeric goals A program for carrying out program objectivesA program for carrying out program objectives

Provides economic information onProvides economic information on

Purchasing power Purchasing power CreditCredit Money Money Federal financeFederal finance

Prices Prices Wages Wages ProductionProduction Business Business activityactivity

www.gpoaccess.gov/eop/index.html

www.gpoaccess.gov/indicators/

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Investment Advisory Resources Investment Advisory Resources

Mergent (Moody’s)Mergent (Moody’s) Standard & Poor’sStandard & Poor’s Value LineValue Line Morningstar Morningstar Other Investment Resources Other Investment Resources

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Mergent (Moody’s)Mergent (Moody’s)

Historical financial informationHistorical financial information The The ManualsManuals divided into categories: divided into categories:

• Finance & BankingFinance & Banking• IndustrialIndustrial• Municipals & GovernmentMunicipals & Government• OTC IndustrialOTC Industrial• Public UtilityPublic Utility• TransportationTransportation

www.merg

ent.com

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Mergent (Moody’s) OnlineMergent (Moody’s) Online

Internet-based access to Internet-based access to

• DetailedDetailed

• Accurate Accurate

• Comprehensive global company databaseComprehensive global company database Features & functionsFeatures & functions::

• Batch printing Batch printing Mergent Online Mergent Online EDGAR® documentsEDGAR® documents

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Mergent Online continuedMergent Online continued• Cross-border searching across multiple Cross-border searching across multiple

databases on a variety of financial and text databases on a variety of financial and text variablesvariables

• Export company reports & financial information intoExport company reports & financial information into Microsoft® Word Microsoft® Word Microsoft® Excel Microsoft® Excel

• View PDF files View PDF files Adobe® Acrobat® ReaderAdobe® Acrobat® Reader

• Compare reports of multiple companiesCompare reports of multiple companies• Speed and reliabilitySpeed and reliability• Customer service, & On-site trainingCustomer service, & On-site training

Materials to assist users and encourage useMaterials to assist users and encourage use Technical support service for data and technical issuesTechnical support service for data and technical issues

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Standard & Poor’sStandard & Poor’s

A subsidiary of McGraw-Hill (the publisher of this textbook)A subsidiary of McGraw-Hill (the publisher of this textbook) Comprehensive coverage Comprehensive coverage Corporation RecordsCorporation Records -12,000 publicly held US & International -12,000 publicly held US & International

companiescompanies Balance SheetBalance Sheet Income StatementIncome Statement Corporate profilesCorporate profiles SubsidiariesSubsidiaries SEC reportsSEC reports

Stock ReportsStock Reports Industry SurveysIndustry Surveys Register of Public companiesRegister of Public companies Register of Private companiesRegister of Private companies

NewsNews Press ReleasesPress Releases Company’s market Company’s market performance performance Technical evaluationTechnical evaluation Insider activityInsider activity Key stock statisticsKey stock statistics Analysts’ consensusAnalysts’ consensus

www.standardandpoors.com

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Value LineValue Line Raw financial dataRaw financial data Trendline growth ratesTrendline growth rates Price history patterns in graphic formPrice history patterns in graphic form Quarterly Quarterly

• SalesSales

• EarningsEarnings

• DividendsDividends• Sales & profit margins by line of businessSales & profit margins by line of business

www.valueline.com

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Value Line (cont.)Value Line (cont.)A Unique Evaluation SystemA Unique Evaluation System

Historical relationshipsHistorical relationships Regression analysisRegression analysis Ratings 1 through 5Ratings 1 through 5

• ““1” highest positive1” highest positive• ““5” lowest 5” lowest

TimelinessTimeliness SafetySafety Valuation has minimum human judgment Valuation has minimum human judgment

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MorningstarMorningstar Products for:Products for:

• InvestorsInvestors

• Finance professionalsFinance professionals Products include:Products include:

• Morningstar Mutual FundsMorningstar Mutual Funds• Morningstar No-Load FundsMorningstar No-Load Funds• Morningstar InvestorMorningstar Investor• Morningstar Mutual Fund 500Morningstar Mutual Fund 500• Morningstar Variable Annuity/LifeMorningstar Variable Annuity/Life• Performance Reports Performance Reports

www.morningstar.com

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Morningstar continuedMorningstar continued

Stocks and Exchange Traded Funds Stocks and Exchange Traded Funds (EFTs)(EFTs)

Morningstar Ascent – Morningstar Ascent – individual investorindividual investor Morningstar PrincipiaMorningstar Principia Principia PlusPrincipia Plus

investment professionalinvestment professional

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Other Investment Resources Other Investment Resources

Dun & Bradstreet “Key Business Ratios”Dun & Bradstreet “Key Business Ratios”• 14 significant ratios14 significant ratios

Current assts/current debtCurrent assts/current debt Net profits/net salesNet profits/net sales Total debt/tangible net worthTotal debt/tangible net worth

• 800 different lines of business by SIC code800 different lines of business by SIC code

www.dnb.com

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Other Investment Resources Other Investment Resources continuedcontinued

D&B Million Dollar Directory (print & online)D&B Million Dollar Directory (print & online) New, intuitive user interface New, intuitive user interface Updated online "Help” system Updated online "Help” system Search on NAICS & SIC codes is now supported Search on NAICS & SIC codes is now supported Running list of search criteria has been added Running list of search criteria has been added Improved sorting feature will now sort any number Improved sorting feature will now sort any number

of records of records "Jump To" feature allows you to find a specific "Jump To" feature allows you to find a specific

record quicklyrecord quickly Automatic authentication between domestic & Automatic authentication between domestic &

international databasesinternational databases

D&B's Million Dollar Databases

www.dnbmdd.com

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Other Investment Resources Other Investment Resources continuedcontinued

RMA Annual Statement Studies RMA Annual Statement Studies • Published by Robert Morris AssociatesPublished by Robert Morris Associates

• 150 industry classifications150 industry classifications

• Comparing data Comparing data Balance sheetBalance sheet Income statementIncome statement

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Other Investment Resources Other Investment Resources continuedcontinued

Thompson Financial Thompson Financial Thompson ResearchThompson Research • Current Current • HistoricalHistorical

Analyst reportsAnalyst reports FilingsFilings

• 30,000 companies worldwide30,000 companies worldwide• SDC Platinum database ofSDC Platinum database of

MergerMerger AcquisitionAcquisition

TMTM

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Other Investment Resources Other Investment Resources continuedcontinued

Thomson’s IRChannelThomson’s IRChannel• First Call earnings estimatesFirst Call earnings estimates

Retail stock brokersRetail stock brokers AnalystsAnalysts

• Merrill Lynch Merrill Lynch • Salomon Smith BarneySalomon Smith Barney• Paine WeberPaine Weber• Prudential SecuritiesPrudential Securities

Industry Industry CompanyCompany Bond market analysisBond market analysis Futures Futures CommoditiesCommodities Options Options Tax SheltersTax Shelters

• OilOil• GasGas• Real EstateReal Estate

Research & info on:

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SEC Filings, Periodicals, and SEC Filings, Periodicals, and JournalsJournals

Security and Exchange Commission FilingsSecurity and Exchange Commission Filings Periodicals and NewspapersPeriodicals and Newspapers JournalsJournals

2929

Securities and Exchange Securities and Exchange Commission (SEC)Commission (SEC)

Primary mission: Primary mission: Protect investors Protect investors Maintain the integrity of the securities marketsMaintain the integrity of the securities markets

Investors goals: Investors goals: Help secure their futuresHelp secure their futures Pay for homesPay for homes Send children to collegeSend children to college

www.sec.gov

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SEC continuedSEC continued

10-K report – annual 10-K report – annual most popularmost popular 8-K report – significant changes8-K report – significant changes 10-Q report quarterly10-Q report quarterly

• Quarterly financial statementsQuarterly financial statements

• Changes in stockholdingsChanges in stockholdings

• Legal proceedingsLegal proceedings

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Common violations that may lead Common violations that may lead to SEC investigationsto SEC investigations

Insider trading: buying or selling a security in Insider trading: buying or selling a security in breach of a relationship of trust and confidence breach of a relationship of trust and confidence while in possession of material, non-public while in possession of material, non-public information about the security information about the security

Misrepresentation or omission of important Misrepresentation or omission of important information about securitiesinformation about securities

Manipulating the market prices of securitiesManipulating the market prices of securities Stealing customers' funds or securitiesStealing customers' funds or securities Violating broker-dealers' responsibility to treat Violating broker-dealers' responsibility to treat

customers fairlycustomers fairly Sale of securities without proper registrationSale of securities without proper registration

3232

Security and Exchange Security and Exchange Commission FilingsCommission Filings

SEC websiteSEC website

• ““Filings & Forms (EDGAR)Filings & Forms (EDGAR) Information on numerous investor issuesInformation on numerous investor issues

• RegulationsRegulations

• Special studiesSpecial studies

• Securities related litigationSecurities related litigation

EDGAR = Electronic Data Gathering, Analysis, EDGAR = Electronic Data Gathering, Analysis,

& Retrieval (SEC filings database)& Retrieval (SEC filings database)

www.sec.gov

3333

Periodicals and NewspapersPeriodicals and Newspapers

Magazines:Magazines: FortuneFortune Business WeekBusiness Week ForbesForbes Financial WorldFinancial World MoneyMoney

3434

Periodicals and Newspapers Periodicals and Newspapers cont.cont.

Financial sections of newspapers in:Financial sections of newspapers in: ChicagoChicago DallasDallas ClevelandCleveland New York TimesNew York Times (exceptional coverage) (exceptional coverage) The Wall Street JournalThe Wall Street Journal (most popular) (most popular) Barron’s Business and Financial WeeklyBarron’s Business and Financial Weekly Investor’s Business DailyInvestor’s Business Daily

3535

Periodicals and Newspapers Periodicals and Newspapers cont.cont.

The Wall Street TranscriptThe Wall Street Transcript Commercial and Financial ChronicleCommercial and Financial Chronicle Financial Times (Financial Times (www.ft.comwww.ft.com)) Industriscope (by Media General)Industriscope (by Media General)

Source of:Source of:• Fundamental analysis, &Fundamental analysis, &• Technical indicatorsTechnical indicators

3636

JournalsJournals

Financial Analysts JournalFinancial Analysts Journal The Journal of Portfolio ManagementThe Journal of Portfolio Management Institutional InvestorInstitutional Investor Journal of FinanceJournal of Finance Journal of Financila EconomicsJournal of Financila Economics Journal of Financial & Quantitative AnalysisJournal of Financial & Quantitative Analysis Journal of Financial EducationJournal of Financial Education

3737

DatabasesDatabases

S&P’s COMPUSTAT S&P’s COMPUSTAT • 50 years of data50 years of data

• 50,000 North America and Global companies50,000 North America and Global companies

• Financial dataFinancial data

• Market dataMarket data• Comparisons betweenComparisons between

IndustriesIndustries CompaniesCompanies

www.compustat.com

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Databases Databases continuedcontinued

EXAMPLE – Using COMPUSTAT, one screen EXAMPLE – Using COMPUSTAT, one screen for companies that meet the following for companies that meet the following criteria:criteria:

1. Dividend yield greater than 4%1. Dividend yield greater than 4%

2. Earnings growth greater than 15% per year2. Earnings growth greater than 15% per year

3. P/E ratio less than S&P’s 500 Stock Index3. P/E ratio less than S&P’s 500 Stock Index

4. Market price less than book value4. Market price less than book value

3939

Databases Databases continuedcontinuedOther Sources of DataOther Sources of Data

Interactive Data CorporationInteractive Data Corporation CRSP DatabaseCRSP Database Bloomberg’s Professional Financial ServiceBloomberg’s Professional Financial Service

• Financial instrumentsFinancial instruments• Real-time data accessReal-time data access• Current newsCurrent news• HeadlinesHeadlines• AudioAudio• Television reportsTelevision reports• Proprietary analytical toolsProprietary analytical tools

4040

The Internet and Investment The Internet and Investment InformationInformation

Alert & wary using online dataAlert & wary using online data• Check for reliabilityCheck for reliability

• Source of dataSource of data• Check for cluesCheck for clues

Date of dataDate of data Last updateLast update

4141

Additional WebsitesAdditional WebsitesStock exchangesStock exchanges

Provide information such as:Provide information such as: VolumeVolume Historical dataHistorical data Trading dataTrading data

NYSENYSE www.nyse.comwww.nyse.com

ChicagoChicago www.cbot.comwww.cbot.com

www.cboe.comwww.cboe.com

NASDAQNASDAQ www.nasdaq.comwww.nasdaq.com

AMEXAMEX www.amex.comwww.amex.com

LondonLondon www.londonstockexchange.comwww.londonstockexchange.com

Bid & ask pricesBid & ask prices Stock quotesStock quotes Regulatory issuesRegulatory issues

4242

Websites Websites CommentsComments

moneycentral.msn.com/investor moneycentral.msn.com/investor Information on investing, Information on investing, news, and financial datanews, and financial data

money.cnn.commoney.cnn.com Current information about Current information about markets and companiesmarkets and companies

www.bloomberg.comwww.bloomberg.com Market news and dataMarket news and data

www.freerealtime.comwww.freerealtime.com News, information and real News, information and real

time quotestime quotes

finance.yahoo.com finance.yahoo.com Information about investing, Information about investing, companies and markets companies and markets

Class Project Websites

4343

WebsitesWebsites CommentsComments

www.thestreet.comwww.thestreet.com Information and opinion about Information and opinion about

markets and companiesmarkets and companies

www.business.comwww.business.com Business-specific search Business-specific search

engine and business engine and business informationinformation

www.businessweek.comwww.businessweek.com News and business News and business

information—requires feeinformation—requires fee

www.wsj.comwww.wsj.com Wall Street Journal online—Wall Street Journal online—

requires feerequires fee

www.financialtimes.comwww.financialtimes.com Financial Times online—most Financial Times online—most

articles require feearticles require fee

4444

WebsitesWebsites CommentsComments

www.forbes.comwww.forbes.com Forbes online—some Forbes online—some

information requires feeinformation requires fee

www.stocksandnews.comwww.stocksandnews.com News and commentary on News and commentary on

stocks and marketsstocks and markets

www.moneychimp.comwww.moneychimp.com Stock analysis and educational Stock analysis and educational

informationinformation

www.economy.comwww.economy.com Various forms of economic Various forms of economic

informationinformation

www.stls.frb.orgwww.stls.frb.org

St. Louis Federal Reserve Bank site—St. Louis Federal Reserve Bank site—includes FRED (Federal Reserve includes FRED (Federal Reserve Economic Data) with historical, Economic Data) with historical,

financial and economic data on the financial and economic data on the U.S. U.S.

4545

WebsitesWebsites CommentsComments

www.bigcharts.comwww.bigcharts.com Create stock price charts Create stock price charts

www.financewise.comwww.financewise.com Finance-only search engineFinance-only search engine

www.economagic.comwww.economagic.com Directory site of economic data Directory site of economic data

collectionscollections

www.investorlinks.comwww.investorlinks.com Directory site of finance-related Directory site of finance-related

websiteswebsites

4646

SummarySummary Investors finding relevant information Investors finding relevant information Were to look and what to look forWere to look and what to look for Guidance and sample dataGuidance and sample data Investors’ problemsInvestors’ problems

• Find usable informationFind usable information• TimelyTimely• RelevantRelevant

4747

SummarySummary

Too many sources haunt beginnersToo many sources haunt beginners Could solve problem of finding good data in libraryCould solve problem of finding good data in library Process increases awareness of the types of Process increases awareness of the types of

information available.information available.