Stock Investment Advice in the Financial Press
Is an important source of information on the stock market for value investors
Checking stock investment advice contained in newspapers, magazines and newsletters is an important value investing activity.
I refer to the business section of the financial press (e.g., The Australian Financial Review), and the business section of major daily newspapers for company information.
Articles and recommendations in these publications provide useful company background, or possible candidates for inclusion in a watch list.
Range of Information
These publications contain daily share prices, together with the high and low share prices for the company in the last year, the current dividend yield, the current earnings per share and the price/earnings ratio.
Depending on the day of the week, other information may be available.
You need to be aware that the current earnings per share refers to the figure quoted in the last annual report. This means that it could be up to a year old.
As the price earnings ratio also uses the earnings per share figure, it could also be seriously out of date.
As a result, some commentators use the prospective or forecast earnings per share and P/E ratio. These are considered to be more up to date - but are dependent on the accuracy of the forecast!
The cost of newspapers and magazines needs to be taken into account as part of stock investment advice expenses as it can mount up over a year if a paper is bought every day and a magazine every few weeks.
Depending on circumstances, the cost may be tax deductible.
Investment Magazines, Periodicals and Newsletters
Stock investment magazines (e.g., the Smart Investor in Australia) contain a range of articles and recommendations mostly relating to stocks, including stock market statistics.
Stock Investing Newsletters contains a Directory of Investment Newsletters for different regions around the world and on a range of investment topics including value investing. You can sign up for Financial Newsletters today.
The greatest use of these types of publications to me is to provide a source of recommendations to which I can apply my own analysis using a template.
Some Limitations of Financial Publications
Unfortunately, the financial information the financial press quotes often does not include the return on equity.
Return on equity (or profitability) is the single most important piece of information I need to commence evaluating a company.
Given that these magazines have to come up with upbeat stock market top picks every month, their recommendations often fail my criteria when value/price analyses are undertaken.
However, they are a good source of commentary on the state of the stock market and like other parts of the financial press, essential reading.
From a value investing perspective, financial publications such as newspapers and financial magazines can provide valuable stock investment advice, including stock recommendations.
Because these publications often fail to include crucial stock information such as return on equity, they need to be used in conjunction with information from other sources such as online broker websites.
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