Comments on: Excellent Investment Analysis Reports

By: Weekly Dividend Investing Roundup - March 21, 2009 | The Dividend Guy Blog

Weekly Dividend Investing Roundup - March 21, 2009 | The Dividend Guy Blog — Sat, 21 Mar 2009 11:02:01 +0000

[...] Excellent investment analysis [...]

By: Nurseb911

Nurseb911 — Fri, 20 Mar 2009 05:15:54 +0000

I think what Mike touched on identifies a larger issue I have with sell-side analysts: specifically their conflict of interest.

What the regular investor doesn’t recognize is that these reports aren’t about investor education; they are intended to persuade an investor buy or sell based on a recommendation that likely benefits alternative parties more than the individual.

When I talk about Derek Foster and his books this is one of my largest beefs: the conflict of interest that exists that an investor can’t identify through all the smoke & mirrors. Analysts play an important role in the industry, but I have rarely (if ever) heard one make a buy or sell recommendation on the fundamentals of the business. Earnings growth or earnings estimates are great, but they tell you nothing about the fundamentals of the business or how to conduct your own analysis. My program (SAML) is essentially an investing tool that readers can use and apply to any stock they want to research. My subscribers are interested in the analysis not because of what stocks I analyze but because of the insights I provide in how to identify problems or opportunities in the operations of companies.

Any investor has to ask themselves the question, “Who stands to benefit from this advice or insight more?” If the answer isn’t you, then likely you’re better doing the research yourself. If you don’t know how, there are few resources out there available to show how to conduct a thorough analysis.

41 subscribers already get these reports for free (DGI being one )…..that should say something about my motivations for doing this.

By: Shank

Shank — Thu, 19 Mar 2009 18:36:33 +0000

Jaded indeed…they don’t get paid for putting together M&A/takeover work – that’s the bankers job and what bankers get paid to do…you’ll never see an analyst put together reports on potential marriages of companies unless a rumour has completely immersed the street (i.e. in the height of the LBO boom, analysts were regularly publishing various LBO takeout scenarios on all their companies under coverage…those reports served as food for thought rather than cheerleading PE firms to takeout their companies……(you’re likely remembering the tech boom when research did get paid based on M&A, which is ludacris and all the Henry Blogets of the world should still be in jail because of it)…

Analysts’ compensation is more closely tied to generating trades within the firm and covering companies that are likely to use the banking units. An analyst with a good research will generate more trading commissions…but i know the buy-side even ignors the buy, sell, hold recommendations. And rightfully so. However, the buy-side uses the other aspects of sell-side research extensively to build up portfolio ideas.

By: Jerry Hung

Jerry Hung — Thu, 19 Mar 2009 18:11:51 +0000

I so don’t have time to read reports (TDW or anybody else’s).

I don’t pretend I know-it-all either, just invest where I feel comfortable and stay around diversified/buy-and-hope/dividend growth etc… so far, besides the BIG market downhill, I am actually doing alright on the way up

I also recommend reading Dividend Growth blogs, and as well as 247wallst (they sell subscriptions as well, and I’d pay for that before others unfortunate)

By: Four Pillars

Four Pillars — Thu, 19 Mar 2009 17:28:31 +0000

Shank – forgive me for being incredibly jaded and cynical, but I would argue that analysts get paid big bucks for their sales roles in getting new business (M&E, takeovers, stock sales etc).

By: Shank

Shank — Thu, 19 Mar 2009 16:47:31 +0000

Some notes (i figured this would stir some passion).
1. Schwab isn’t a research house so I wouldn’t purchase those reports period.
2. Sell side research is very in-depth – ignore their final recommendation (sell, buy, hold or variations therein) and use everything else. There is a reason that top analysts make $1mln+ a year and entry analysts make $250k-$300k. Its not fromdoing poor work.

My point is, if you have a discount brokerage at a big bank, you get access to 100s of reports, a team of analysts and associates to do the work for you and all that is left if foryou to not pay them more, but to come to your own conclusion. That’s what i was getting at.

By: mjw2005

mjw2005 — Thu, 19 Mar 2009 16:40:23 +0000

I love the Nurse’s analysis…Don’t know why he’s a Nurse…..should work for a brokerage….anyways they are a good read.

By: Dividend Growth Investor

Dividend Growth Investor — Thu, 19 Mar 2009 16:34:49 +0000

SS,

The research reports that my broker (Schwab) gives me aren’t even 10% as thorough and insightful as Brad’s analyses. If I were to purchase them, they would be even more expensive than the reports that Brad publishes.

Best Regards,

Dividend Growth Investor ( a big fan of Brad’s work )

By: Four Pillars

Four Pillars — Thu, 19 Mar 2009 14:59:45 +0000

SS – That’s true that there are lots of free reports available, but I personally don’t trust a word from any analyst employed by a broker.

There are supposed to be “Chinese walls” etc but that is obviously a load of crap given that for years – you would never see any “sell” recommendations.

I think an analysis from an independent analyst is far more trustworthy – which makes it worth more.

By: Shank

Shank — Thu, 19 Mar 2009 14:25:07 +0000

not to burst anyone’s bubble, but with most discount brokerages (i.e. NBF, CIBC, BMO, TD) you get access to their analysts work, for free. Of course there is the true nature of sell side research that is biased but you will get access to 100s of free, timely, detailed, and updated evaluations across all sectors and industries..

just some food for thought in a frugal environment.