Wednesday, October 6, 2010

The Info's Getting Worse

When Ben Graham was researching stocks, it wasn't easy to get information. Companies did not have to disclose the kind of info we take for granted today, and 3rd party analysis that was independent was hard to come by (okay, maybe that one's still a problem). Investors would have to send for snail-mail financial reports, and/or visit libraries to manually access printed data that was several weeks or months old. Today, all that info and then some is available to investors at the click of a button. But the challenge to investors has merely transformed from one of data availability to that of data filtration. With the plethora of information available, investors must determine how to identify sources of relevant information without getting bogged down by the irrelevant. That is getting more difficult!

One example illustrating this issue is the easy-to-use Google Finance, which is a powerful tool for investors despite some of its inadequacies. Whereas Google Finance used to contain useful, recent articles about individual stocks on the right-hand side of its individual stock pages, it now appears to mostly contain a large dearth of automated articles describing trends, MAC-D's, and moving averages leaving no room for articles that actually the discuss a company's business situation.

For example, articles from "Comtex SmartTrend" keep popping up on individual stock pages, discussing stock price trends, whereas articles discussing the company's prospects are nowhere to be found! As another example, consider this possibly automated article on Nu Horizons, which last month agreed to be bought out at $7/share (and therefore trades at $6.96 today). The article discusses Nu Horizons' upcoming earnings and how it might impact the share price, completely oblivious to the buyout and the fact that the share price is tied to the buyout price.

What used to be a good source of relevant information for value investors has turned into a far less useful resource. Are readers experiencing the same problem? How do you find relevant, value-oriented information about the stocks you follow? I have found following a bunch of value investors on twitter to be very useful in increasing the amount of relevant information I come across. What methods do you use?
This article was written by Saj Karsan of Barel Karsan. If you enjoyed this article, please consider subscribing to my twitter feed.

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