Where To Find Reliable Investment Advice For Free!
Warren Buffett taught us that the two critical factors necessary for investing wisely are determining the intrinsic value of a given business, and then paying a fair or a bargain price in order to acquire its shares.
The two primary methods for making money in the stock market are value investing and momentum trading. And each of these methods is based on emotion: value investing is based on certainty while momentum trading is based on hope.
A value investor would never buy any business until he/she has followed Buffett's advice on intrinsic value. That means a value investor will not buy a stock without knowing for certain what the business is worth and what would be a fair price to pay for buying the shares of that business.
Momentum traders on the other hand will buy a stock regardless of what it's worth, in the hope that sooner or later someone else will pay a higher price for that same stock. This style of "investing" depends upon there being a steady supply of suckers out there who are willing to purchase overpriced stocks.
But back now to value investing, and finding reliable advice about the right price to pay for a given company's shares.
Getting an expert valuation of any company is based on acquiring an exceptional knowledge of its business. And this can only be gotten by studying a business and by working closely with its management team. So for an individual investor, this would involve reading a company's 10-K and 10-Q filings, studying industry overviews and analyst updates on the company, and listening in on conference calls in order to come up with your own reasonable valuation of the business -- which is almost impossible for the average investor to accomplish!
So the next best option for an individual investor is to find someone who does have the time to do all of this and then pay him or her for their opinion of a given company. But getting investment advice can be very expensive. And if that advice is either cheap or for free, then it is already most likely to be common knowledge and not worth paying for. So what are you to do?
Well amazingly, there is one group of specialists who give out free research on stocks, and their information is both first-rate as well as being very private. These people are experts in that they only work on one company at a time.
These specialists don't publish their reports frequently, but when they do, they not only tell you exactly what they think of the company's future prospects, but they also tell you what they think the company is worth.
So who are these experts I talk about? They are the corporate insiders, and their reports are available on the SEC's Form 4. Column 3 of this Form (the Transaction Code) tells you exactly what these insiders think are their company's future prospects. And this is also where they tell you if they feel the company is a buy.
In order to learn the buy price, you go to column 4 (Securities Acquired or Disposed) which tells you exactly what the insiders were willing to pay for the stock. And since insiders only have two days time in which to file their transactions with the SEC, you can probably buy the stock at a similar price.
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The two primary methods for making money in the stock market are value investing and momentum trading. And each of these methods is based on emotion: value investing is based on certainty while momentum trading is based on hope.
A value investor would never buy any business until he/she has followed Buffett's advice on intrinsic value. That means a value investor will not buy a stock without knowing for certain what the business is worth and what would be a fair price to pay for buying the shares of that business.
Momentum traders on the other hand will buy a stock regardless of what it's worth, in the hope that sooner or later someone else will pay a higher price for that same stock. This style of "investing" depends upon there being a steady supply of suckers out there who are willing to purchase overpriced stocks.
But back now to value investing, and finding reliable advice about the right price to pay for a given company's shares.
Getting an expert valuation of any company is based on acquiring an exceptional knowledge of its business. And this can only be gotten by studying a business and by working closely with its management team. So for an individual investor, this would involve reading a company's 10-K and 10-Q filings, studying industry overviews and analyst updates on the company, and listening in on conference calls in order to come up with your own reasonable valuation of the business -- which is almost impossible for the average investor to accomplish!
So the next best option for an individual investor is to find someone who does have the time to do all of this and then pay him or her for their opinion of a given company. But getting investment advice can be very expensive. And if that advice is either cheap or for free, then it is already most likely to be common knowledge and not worth paying for. So what are you to do?
Well amazingly, there is one group of specialists who give out free research on stocks, and their information is both first-rate as well as being very private. These people are experts in that they only work on one company at a time.
These specialists don't publish their reports frequently, but when they do, they not only tell you exactly what they think of the company's future prospects, but they also tell you what they think the company is worth.
So who are these experts I talk about? They are the corporate insiders, and their reports are available on the SEC's Form 4. Column 3 of this Form (the Transaction Code) tells you exactly what these insiders think are their company's future prospects. And this is also where they tell you if they feel the company is a buy.
In order to learn the buy price, you go to column 4 (Securities Acquired or Disposed) which tells you exactly what the insiders were willing to pay for the stock. And since insiders only have two days time in which to file their transactions with the SEC, you can probably buy the stock at a similar price.
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posted by Bob Moser at
8:05 PM
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