There's no question that we're living in theInformation Age. The Internet, in particular,puts a wealth of data and resources atour fingertipsâ€”sort of like the on steroids. The problem is that with so muchinformation, it's easy to feel overwhelmed and not soeasy to sift through the volumes of dataâ€”especiallywhen it comes to researching stock investments. Aroadmap can help.
The first step, according to an article in , is to set realistic expectations. As the articleappropriately points out, "Since all the informationyou'll find online is either already public or reliable,don't expect it to give you an edge on the market."
So, what can the information you find online dofor you? Most importantly, it can help you understandrisks associated with a particular stock. The Business2.0 article offers advice by incorporating informationfound on a real company, Activision, which is the$910-million number-two US maker of video games.
The first stop on your journey should be the company'sWeb site. Here you'll get an overview of thecompany's business and its leadership. In the case ofActivision, its CEO, Robert Kotick, has been incharge for 13 years and is on Yahoo!'s board. That'sreassuring. However, the information on a companysite is there to enhance the company's image, so readwith a wary eye.
Next, go to Google.com and type "stocks" and theticker symbol in the search field. You will arrive atcompany-specific data on Yahoo! Finance. There willalso be links to sites containing similar information,including Fool.com, MSN MoneyCentral, Quicken,and ClearStation. These sites will provide you with agood overall picture of the company.
For example, the article points out that informationretrieved on Activision shows that the companyhas a solid balance sheet with $425 million in cashand no debt. However, a quick check of last year'sannual revenue growth of less than 10% tells you thatthe company's product is not selling like hot cakes.
The next step is to check on official disclosures.According to the article, companies are required bythe SEC to disclose tons of information to shareholderseach quarter. You can check by visitingwww.sec.gov. Click on "Filings & Forms," "Searchfor Company Filings," and then "Companies &Other Filers." Next, type in the stock name. Whatyou'll get is a year's worth of full-disclosure quarterly(10-Q) and annual (10-K) reports. According to the article, the SEC is examining Activisionas part of an industry-wide investigation into questionablebookkeeping practices. This might amount tonothing, but it's good to be aware of.
Wall Street Journal
Next, stay abreast of news involving the companyand its industry. Understanding the market in which acompany operates can help you gauge the impact currentand future events could have on your stock.There are several sources you can turn to for thisinformation. The article points out that LexisNexis, adatabase containing decades of articles from noteworthynewspapers, costs $30 per day. A 1-year onlinesubscription to the costs $79.
The article notes that a database searchturned up an April 2004 article that reported thatActivision was partnering with Nielsen, the TV ratingsgiant, on a program to monitor how many videogame players see ads that appear during video games.The resulting research could be extremely useful inActivision's future advertising efforts.
Finally, you decide for yourself whether or not topurchase the stock you've been researching. You stillwon't know for certain whether the stock is going torise or fall, but at least you'll have made an educateddecision. And if nothing else, a wise decision shouldhelp you sleep better at night.