Demystifying Investment Information

Disclaimer

Preconference presented by the
BRASS Education Committee
Friday, June 24, 1994, Miami, Florida


"If you have access to so much information,
why aren't you rich?"

Presented by
Michael Lavin

Transcription
Carol Womack, Chief Editor



David and I decided to try to divide this universe up between public library information and academic library information. This is, of course, a very artificial division. I'm a strong believer that there is much more in common between business reference requests in a public and academic library than there might be in a given institution. In my academic institution, for example, I have very much less in common with the humanities librarian than I have with a business librarian in a corporate setting. There is that artificiality. There are important distinctions, however, and there is one way to divide up materials.

To start things off, we'll talk about what are the most conceptual differences and then we will divide the resources up by category. That's how we decided to tackle this. David and I have worked in both academic and public libraries.

So let's talk about similarities and differences from my viewpoint in an academic setting. Let's completely forget about the fact that people from the community might be using your library or people from the university community might be using the public library. What are some differences? One is that there is a much stronger demand for raw data in an academic setting than action, analysis-oriented literature. Second, there is a strong interest in retrospective data--much more so than one would expect. We'll talk about why that is. In terms of what kind of audiences we deal with, we have graduates and undergraduates. In an undergraduate setting, there are a lot of very intensive course assignments. There's a lot of examination of price behavior over time--assignments in which students compile portfolios, use financial analysis of company and industry. Undergraduates by and large tend to be looking for the convenience factor. They're looking for "what am I going to find that's going to give me everything I want all at once?" It's human nature, it's understandable. The problem is that there is so much information out there, so fragmented that convenience expectation is fictitious. There are a lot of nicely packaged products that can help them, but no matter what the assignment, they're going to have to be familiar with different tools.

Once you get to Ph.D. level and faculty level, it's a different kind of situation, particularly if you are at university where the finance and accounting people have a strong empirical orientation. Finance research is highly empirical. You're going to get lots and lots of requests related to event studies. It means gathering empirical data, usually over some range of time. How do you examine relationships between events? The reason you do that is to help you explain behavior of financial markets. A finance professor came in last semester investigating the relationship between performance of a particular company's stock and announcements of that company getting in trouble with the Environmental Protection Agency. We went into the literature and interestingly enough found it wasn't even worth pursuing because in the financial markets those kinds of announcements never even become news. There are lots of wonderful EPA databases out there, but the news doesn't make it into the financial press of SEC disclosure documents.

In an academic setting, we often have access to academic discounts for business products. These materials may not be available to public libraries. For example, there's a British system out there called DATA SCREEN. They have an academic package for $15,000, unlimited service. Twenty academic libraries use this.

I strongly believe that this is important in business librarianship. I am a strong believer in having some subject knowledge. Keeping abreast of current trends , the financial markets, new financial instruments, etc. It's particularly important in an academic setting, because we are teaching the students about these sources. In an academic library, you have the luxury of time shifting, reference triage; you can work with more difficult questions. We do reference by appointment as well. There's time for a fair amount of explanation.

The INTERNET has some interesting resources. Before we talk about traditional library resources, I thought I would discuss INTERNET sources. I just want to point out couple of sources very quickly. I strongly recommend looking at some of these sources. I listed some of the sites. The beauty of GOPHER is that it's such an interconnected source. The INTERNET EDGAR dissemination is of interest. Now it is reasonably user friendly. It's not a source for downloading 50 or 100 reports. It's locating a particular company quickly. It has all esoteric SEC files you don't see in traditional library collections. I tried to put as much in your handouts packet as I could find. We don't want show and tell; it's more important to remember types of sources. For example, how do you verify whether a company is publicly traded or not? There are a lot of great sources out there. Disclosure used to publish a booklet. The Financial Stock Guide Service looseleaf version includes directory of publicly traded companies with monthly updates. Unfortunately, it cost $1900. A reasonably-affordable sources is the semi-annual National Monthly Stock Guide. You can use that as a directory of publicly traded companies. Standard & Poor's Directory can be used as well. You want to find out about capital changes, changes in name, spin-offs, companies that cease to exit. The Prentice-Hall loose-leaf service does this.

Let's talk about primary documentation and secondary sources that arise from primary documentation. You're going to get a 15-minute crash course. Public companies have to disclose information to the SEC. There are annual reports, 10-K reports--that's where the good stuff is. Proxy statements are tremendously valuable because they proved background discussion of corporate decisions. They're useful concerning mergers about to take place. Discussed are motivations for the merger, target company information, and so forth. There are other important SEC files out there, some available through commercial services.

There's more published information about investments than any other aspect of business librarianship. There is a ton of stuff out there. There's such a huge diversity of products. Collection development decisions need to be made, because there is so much out there. In an academic setting, I think it's particularly important to have a variety of sources for pedagogical reasons. There are so many different formats. Optical products, LASER Disclosure, CD-ROM products are available. There are microfiche providers including Disclosure and Q-Base. The latter is less expensive. I listed a variety of sources on this particular handout.

The printed sources are designed to facilitate analysis. There are other affordable tools. The stockbroker's bible is the S&P Stock Guide. It provides basic, key factual information about stocks traded in the U.S. Certain things are unique to a particular product. We'll look at these this afternoon in the case study.

The last thing I want to talk about is the importance of news information: Wall Street Journal, scanning headlines, and so forth. Certainly fulltext sources and wire services like Business Wire. There are many of these sources. There are event-study type tools, including yearbooks summarizing what happened in a certain category. SEC Abstracts is an example. This afternoon we'll take a look at some of these sources.

Somebody comes in looking for comprehensive information. The best sources are S&P and Moody's--wonderful sources of current and historical information. And last week I learned Moody's Industry Review has a section on closed-end mutual funds. I could have talked all day on this topic; I wanted to give you some ways to make sense of the data out there.


bulletDemystifying Investment Information: A Preconference
BRASS Education Committee
Friday, June 24, 1994, Miami



Disclaimer : This publication has been placed on the web for the convenience of BRASS members. Information and links will not be updated. Posted 12 December 1997.