Today I want to talk about the importance of reading company reports in order to obtain a grasp of what a particular enterprise is doing and what they plan to do. First of all, it is extremely easy to get access to these, check on the Securities and Exchange Commission website under company fillings and simply enter the stock symbol or company name. In there, you'll find the reports that companies file throughout the year. Such as Annual Reports (10-K's), Quarterly Reports (10-Q's), Director's Dealings (Form ), among others. Whether you want it or not, these are extremely important to look at. They give you insight into what the company is actually doing, plans to do, how it's doing it and how well it's doing (or how badly), rather than just what you read on the news (which is usually biased, and contains opinions that are not from company insiders).
Evidently, there are other ways to check for company information, plans, financial data and other info's. You can check on Yahoo!Finance or Bloomberg, which provide free services. Alternatively, you can participate in online investment communities, which give information upon request or you can simply chat with people to get to know the general sentiment of a particular stock. Motley Fool is a great source to embark in such alternative.
But, it is essential, for value investors to really know what they are about or interested to invest in. And those reports give you the official data from the companies. Despite of what some people might say, if you want guarantees to succeed in the investing world, you cannot expect to become the next Peter Lynch or the next Warren Buffett with recommendations from friends, stock brokers, financial advisors and others. BUT if you do take advice, check on your own and challenge them with questions: Why do you think it's a good investment? How much are they growing? What makes them different from competitors? What are their margins? Can they survive extended recessions?
Even if there are particular components of the reports you do not understand, you can always ask the Investor Relations or even your broker. He is there to serve you, because if he's taking commissions he ought to make you happy by providing you with a great service. Otherwise, it's pointless. You need to be aggressive (in a good way) when it comes to investing.
Regardless of what you might think, you and I can become great investors without visiting the company headquarters or having inside information on it. Personally, it would be extremely hard to visit companies in the US, UK and all over Europe. Specially, because I'm a 19 year old! But what I can do is call the Investors Relations, listen to Conference Calls (which can be found on company websites), read the SEC fillings, chat in online communities, check if the company does business in my country, how well (or how bad it does). And, also, if you know someone in the company ask them questions (there is no better source of information/opinion than people who work at the companies you're interested in).
I know it can be tedious to do all this, but if you ought to become a great investor, like I want to become, you need to invest time before investing money, and most importantly - a great deal of patience (which though stressful to obtain, it becomes something you learn to have)!
Keep Investing.
Take care.
J.P
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