Chapter 4
Sources of
Investment
Information
McGraw-Hill/Irwin
Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
Sources of Investment Information

Aggregate Economic Data

Investment Advisory Resources

SEC Filings, Periodicals, and Journals

Databases

The Internet and Investment Information

Class Project Web Sites
4-2
Aggregate Economic Data

Federal Reserve Bulletin

Federal Reserve Banks

Survey of Current Business

Websites and Economic Date

Other Sources of Economic Data
4-3
Federal Reserve Bulletin
Published Online
http://www.federalreserve.gov/pubs/bulletin

Domestic Financial Statistics

Federal Reserve Banks

Monetary and Credit Aggregates

Commercial Banks

Financial Markets

Federal Finance

Securities Markets and Corporate Finance
4-4
Federal Reserve Bulletin cont.

Real Estate

Consumer Installment Credit

Domestic Nonfinancial Statistics

International Statistics

Securities Holdings and Transactions

Interest and Exchange Rates
4-5
12 Federal Reserve Banks

4-6
12 Federal Reserve Banks
4-7
Federal Reserve Bank of St. Louis
Comprehensive Economic Statistics
www.stlouisfed.org/default.html

U.S. Financial Data

Monetary Trends

International Economic Trends

National Economic Trends
4-8
Federal Reserve Economic Data (FRED)
http://research.stlouisfed.org/

Historical financial data

Historical economic data

Monthly reserves

Interest rates

Commercial banking data

Gross domestic product (GDP)

Regional economic data
4-9
Federal Reserve Bank of St Louis
National Economic Trends – Short Term
4-10
Federal Reserve Bank of St Louis
National Economic Trends – Long Term
4-11
Survey of Current Business
http://www.bea.gov/beahome.html

Published monthly by Bureau of Economic
Analysis of the U.S. Department of Commerce

Major outlet for economic time series data

Extremely helpful for industry analysis

Excellent statistics
4-12
Survey of Current Business continued
http://www.bea.gov/

Great details and sub-categories
• example

Lumber, production statistics
• Hardwoods
• Softwoods



Douglas fir trees
Southern pine
Western pine
4-13
Survey of Current Business cont.
List of major series updates
GDP, GNP
National income
Personal income
Industrial production
Consumer price index (CPI)
Production price index
Construction put in place
Banking
Housing starts and permits Consumer installment credit
Retail trade
Stock prices
Labor force,
Value of export & imports
unemployment, & earnings
Manufacturers’ shipments, Motor vehicles
inventories, & orders
4-14
Websites and Economic Data
Websites
Comments
Free & fee-based research on
 Economy
www.economy.com
 Finance
 Country
 Industry
 Offers comprehensive & timely
analysis & data
www.economy.com/dismal  Covers 180 economic
indicators for 40 different
countries
4-15
Websites and Economic Data
Websites
www.economagic.com
Comments
Comprehensive site of free and
easily available
 Economic time series data
100,000 time series
 Customizable reports
 Access to data in Excel format
 Check their “Most Frequently
Requested Series”
4-16
Other Sources of
Economic Data
4-17
Websites
www.gpoaccess.
gov/indicators/
Comments
Provides economic information on




Prices
Wages
Production
Business activity




Purchasing power
Credit
Money
Federal finance
Economic Report of the President:
Current and foreseeable trends and annual numerical
goals concerning topics such as
• Employment
• Production
• Real income
• Federal budget outlays
 Employment objectives for significant groups of the
the labor force
 Annual numeric goals
 A program for carrying out program objectives

www.gpoaccess.
gov/eop/index.ht
ml
4-18
Investment Advisory Resources

Mergent (Moody’s)

Standard & Poor’s

Value Line

Morningstar

Other Investment Resources
4-19
Mergent (Moody’s)
http://www.mergent.com

Historical financial information

The Manuals divided into categories:
•
•
•
•
•
•
Finance & Banking
Industrial
Municipals & Government
OTC Industrial
Public Utilities
Transportation
4-20
Mergent Online
• Cross-border searching across multiple
databases
• Export company reports & financial
information into
Microsoft® Word
 Microsoft® Excel

• Compare reports of multiple companies
4-21
Standard & Poor’s
www.standardandpoor.com



A subsidiary of McGraw-Hill (the publisher of this textbook)
Comprehensive coverage
Corporation Records -12,000 publicly held US & International
companies









Balance Sheet
Income Statement
Corporate profiles
Subsidiaries
SEC reports
Stock Reports
Industry Surveys
Register of Public companies
Register of Private companies
News
 Press Releases
 Company’s market
performance
 Technical evaluation
 Insider activity
 Key stock statistics
 Analysts’ consensus

4-22
Value Line
www.valueline.com




Raw financial data
Trendline growth rates
Price history patterns in graphic form
Quarterly
•
•
•
•
Sales
Earnings
Dividends
Sales & profit margins by line of business
4-23
Value Line (cont.)
A Unique Evaluation System



Historical relationships
Regression analysis
Ratings 1 through 5
• “1” highest positive
• “5” lowest



Timeliness
Safety
Valuation has minimum human judgment
4-24
Morningstar
www.morningstar.com


Products for:
• Investors
• Finance professionals
Products include:
•
•
•
•
•
•
Morningstar Mutual Funds
Morningstar No-Load Funds
Morningstar Investor
Morningstar Mutual Fund 500
Morningstar Variable Annuity/Life
Performance Reports
4-25
Morningstar continued




Stocks and Exchange Traded Funds
(EFTs)
Morningstar Ascent – individual investor
Morningstar Principia investment professional
Principia Plus
4-26
Other Investment Resources
www.dnb.com

Dun & Bradstreet “Key Business Ratios”
• 14 significant ratios
Current assts/current debt
 Net profits/net sales
 Total debt/tangible net worth

• 800 different lines of business by SIC code
4-27
Other Investment Resources continued
www.dnbmdd.com

D&B's Million Dollar Databases
D&B Million Dollar Directory (print or online)
 Companies listed by name, location and
industry classification
• Online includes searches on NAICS & SIC
codes
• Useful for identifying companies within same
industry or generating contact lists
4-28
Other Investment Resources continued

RMA Annual Statement Studies
• Published by Robert Morris Associates
• 150 industry classifications
• Comparing data
Balance sheet
 Income statement

4-29
Other Investment Resources continued

Thompson Financial
Thompson Research
• Current
• Historical
 Analyst reports
 Filings
• 30,000 companies worldwide
TM
• SDC Platinum database of
Merger
 Acquisition

4-30
Other Investment Resources continued

Thomson’s IRChannel
• First Call earnings estimates


Retail stock brokers
Analysts
•
•
•
•
Merrill Lynch
Smith Barney
UBS
Prudential Securities
Research & info on:
 Industry
 Company
 Bond market analysis
 Futures
 Commodities
 Options
 Tax Shelters
• Oil
• Gas
• Real Estate
4-31
SEC Filings, Periodicals, and
Journals

Security and Exchange Commission
Filings

Periodicals and Newspapers

Journals
4-32
Securities and Exchange
Commission (SEC)
www.sec.gov
Primary mission:
 Protect investors
 Maintain the integrity of the securities markets
Investors goals:
 Help secure their futures
 Pay for homes
 Send children to college
4-33
SEC continued

10-K report – annual

8-K report – significant changes

10-Q report quarterly
most popular
• Quarterly financial statements
• Changes in stockholdings
• Legal proceedings
4-34
Common violations that may lead
to SEC investigations

Insider trading
• buying or selling a security while in possession of
material, non-public information about the security

Misrepresentation or omission of important
information about securities

Manipulating the market prices of securities
4-35
Common violations that may lead
to SEC investigations continued

Stealing customers' funds or securities

Violating broker-dealers' responsibility to treat
customers fairly

Sale of securities without proper registration
4-36
Security and Exchange
Commission Filings
www.sec.gov

“Filings & Forms (EDGAR)
• Information on numerous investor issues
Regulations
 Special studies
 Securities related litigation

EDGAR = Electronic Data Gathering,
Analysis, & Retrieval (SEC filings database)
4-37
Periodicals and Newspapers
Magazines:
 Fortune
 Business Week
 Forbes
 Financial World
 Money
4-38
Periodicals and Newspapers cont.
Financial sections of newspapers in:
 Chicago
 Dallas
 Cleveland
 New York Times (exceptional coverage)
 The Wall Street Journal (most popular)
 Barron’s Business and Financial Weekly
 Investor’s Business Daily
4-39
Periodicals and Newspapers continued

The Wall Street Transcript

Commercial and Financial Chronicle

Financial Times (www.ft.com)

Industriscope
4-40
Journals

Widely read by the profession
• Financial Analysts Journal

Published by Chartered Financial Analyst (CFA)
Institute
• The Journal of Portfolio Management
• Institutional Investor
4-41
Journals continued

Research-oriented academic journals
• Journal of Finance
• Journal of Financial Economics
• Journal of Financial & Quantitative Analysis
• Journal of Financial Education
4-42
Databases

S&P’s COMPUSTAT
www.compustat.com
• 20 years of annual and quarterly financial and
market data for over 50,000 North American
and Global companies
• Standardized to allow comparisons between
industries and between companies
• Useful for analyzing large number of
companies
4-43
Databases continued
EXAMPLE – Using COMPUSTAT:
Search for companies that meet the following criteria:
1. Dividend yield greater than 4%
2. Earnings growth greater than 15% per year
3. P/E ratio less than S&P’s 500 Stock Index
4. Market price less than book value
4-44
Databases continued
Other Sources of Data

Interactive Data Corporation
• FT Interactive

CRSP Database
• University of Chicago’s Center for Research
in Security Prices
4-45
Databases continued
Other Sources of Data

Bloomberg’s Professional Financial Service
•
•
•
•
•
•
Financial instruments and real time data access
Current news
Headlines
Audio
Television Reports
Proprietary Analytical tools
4-46
The Internet and Investment
Information

Be alert & wary using online data
• Check for reliability
• Source of data
• Check for clues
Date of data
 Last update

4-47
Additional Websites
Stock exchanges
NYSE
www.nyse.com
Chicago
NASDAQ
www.cbot.com
www.cboe.com
www.nasdaq.com
AMEX
London
www.amex.com
www.londonstockexchange.com
Provide information such as:



Volume
Historical data
Trading data
 Bid & ask prices
 Stock quotes
 Regulatory issues
4-48
Class Project Websites
Websites
Comments
moneycentral.msn.com/investor
Information on investing,
news, and financial data
money.cnn.com
Current information about
markets and companies
www.bloomberg.com
Market news and data
www.freerealtime.com
News, information and real
time quotes
finance.yahoo.com
Information about investing,
companies and markets
4-49
Websites
Comments
www.thestreet.com
Information and opinion about
markets and companies
www.business.com
Business-specific search
engine and business
information
www.businessweek.com
News and business
information—requires fee
www.wsj.com
Wall Street Journal online—
requires fee
www.financialtimes.com
Financial Times online—most
articles require fee
4-50
Websites
Comments
www.forbes.com
Forbes online—some
information requires fee
www.stocksandnews.com
News and commentary on
stocks and markets
www.moneychimp.com
Stock analysis and educational
information
www.economy.com
Various forms of economic
information
www.stls.frb.org
St. Louis Federal Reserve
Bank site—includes FRED
(Federal Reserve Economic
Data) with historical, financial
and economic data on the U.S.
4-51
Websites
Comments
www.bigcharts.com
Create stock price charts
www.financewise.com
Finance-only search engine
www.economagic.com
Directory site of economic data
collections
www.investorlinks.com
Directory site of financerelated websites
4-52
Class Project Web Sites
4-53