When you become interested in a stock or mutual fund you can call your broker and he will send you reports on how the company is doing, what their management is like and what might be the projected earnings for the company and how the industry is doing. Great information.
You will apply yourself to this mound of papers to determine if you want to buy the equity. You might also send for more reports from independent analysts such as Morningstar. You will become buried in papers. That is what the brokerage company wants. The reason is very simple. If you buy the stock after doing all that research and it goes down instead of up they are not responsible for your stupidity. Of course, if it goes up they can take credit for providing all that great information.
Now let's think for a minute. You received all that information that was already printed so it could be sent to you. It makes me ask when was that printed? How old is the information? If I can get all this stuff about the company it means that anyone can. What it boils down to is the information is just that - information and none of it will tell you that the stock will go up further because the whole world knows.
These brochures are made to help you BUY not SELL. In my years of experience I call them a work of fiction. No brokerage company is going to issue a bad report about a company at least until it is ready for bankruptcy and by then your investment dollars have disappeared.
I know your next question. If I can't rely on those reports how am I going to buy anything? There is a better way. You will want to see the price action of the stock or mutual fund. All stocks undulate as they go up or down and you want to know the major trend.
On the Internet you can go to a web site www.bigcharts.com and type in the symbol of the stock or fund and request a weekly chart going back for about to 5 years. What you are interested in is what is it doing during the past 6 months to one year. If the trend is up it is a buy and if the trend is down or sideways don't buy it or if you own it sell. See how easy that is. Brokers and financial planners won't like it because it takes all the mystery out of buying stock and they don't want you to know this simple procedure.
Analyst reports give you lots of useless information, but will not tell if the stock will go up after you buy it. If it isn't going up don't buy it.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
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