Financial Planning Calculators . Some useful calculators include investment growth calculators, college planning calculators, retirement planning calculators, and others. (See www.fidelity.com , www.financenter.com and also Figure 3.2).
Security Screening Tools . Screening tools allow you to sort through huge databases of securities to help you narrow down your choices and construct your portfolio. (See www.quicken.com , www.morningstar.com , and www.wallstreetcity.com and also Figure 3.3).
Charting . Charting is a technique that plots the performance of stocks over a time period – from months to decades or more. (See www.barchart.com , www.bigcharts.com , www.stockcharts.com and also Figure 3.4).
Stock Quotes and Portfolio Tracking . Almost every investment-oriented web site includes stock quotation and portfolio tracking tools. (See www.investor.msn.com and www.etrade.com ).
Investment Information can be either descriptive or analytical (see Figure 3.5):
Descriptive information is factual data on the past behavior of the economy, the market, the industry, the company, or a given investment vehicle.
Analytical information is available current data in conjunction with projections and recommendation about potential investments.
Some forms of investment information are free (internet, newspapers, magazines, brokerage firms, and libraries); others must be purchased individually or by subscription from the same source categories.
Fair Disclosure Rules . In August 2000, the SEC passed the fair disclosure rule (Regulation FD) requiring senior executives to disclose critical information such as earnings forecasts and news of mergers and new products simultaneously to investment professionals and the public via press releases or SEC filings.
Stockholders’ Reports and 10-K Reports . Annual Reports are are published yearly by publicly held corporations and contain a wide range of information including current and past financial statements (see Figure 3.6 on the following slide). 10-K reports are filed with the SEC and are available at www.freeedgar.com .
Comparative Data Sources . Comparative data sources are typically broken down be industry and firm size and are good tools for analyzing company financial condition. Useful sources include Dunn & Bradstreet’s Key Business Ratios, Robert Morris and Associates’ Annual Statement Studies, and the Almanac of Business and Industrial Financial Ratios.
Subscription Services . With subscription services, a subscriber generally pays a basic fee to access the service’s information and can purchase premium services for greater depth or range (See Table 3.2 for a summary of the major services).
Brokerage Reports . Brokerage firms offer reports from subscription services or from their own in-house analysts. They also provide clients with prospectuses and back-office research reports ( www.multexinvestor.com ).
Fill-or-kill order – canceled if not immediately executed
Day order – if not executed is canceled at the end of the day
Good-’til-canceled (GTC) order – generally remains in effect for 6 months unless executed, canceled, or renewed.
Stop-Loss Order . A stop-loss order is an order to sell a stock when its market price reaches or drops below a specified level; can also be used to buy stock when its market price reaches or rises above a specified level.
Since the passage of the Securities Acts Amendments of 1975, brokers have been able to set their own commission rates.
Fixed Commission Schedules . Fixed brokerage commissions typically apply to the small transactions make by individual investors.
Negotiated Commissions . Negotiated commissions are typically agreed to by the client and broker as a result of negotiations; typically applies to large institutional transactions and to individual investors who maintain large accounts.
The Securities Investor Protection Corporation (SIPC) is a nonprofit membership corporation authorized by the federal government that insures each brokerage customer’s account for up to $500,000 with claims for cash limited to $100,000 per customer.
Mediation is an informal, voluntary dispute resolution process in which a customer and a broker agree to a mediator who facilitates negotiations between them to resolve the case.
Arbitration is a formal dispute resolution process in which a customer and a broker present their argument before an arbitration panel which then decides the case; in this case, you do not have the option to sue.
Advisors with Professional designations are generally preferred (CFA, CFP, ChFC, CLU, CPA)
Online Investment Advice (See Table 3.7)
The Cost and Use of Investment Advice
Investment Clubs . Investment clubs are legal partnerships through which a group of investors are bound to a specified organizational structure, operating procedures, and purpose, which is typically to earn favorable long-term returns from moderate risk investments.