Demystifying Investment Information


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


David Bickford

Transcribed by Lucy Heckman
Carol Womack, Chief Editor

I want to start off by apologizing for not getting up to address you from the podium. I recently had some downtime due to illness, and the bargain I struck with my physician in order to maintain this commitment and travel to Miami to speak to you was two demands he made. The first was that immediately after this program, after my day's activities, that I go back to my hotel room, lie in bed and order room service. I had absolutely no problem whatsoever with that first demand. The second was that I minimize any walking around and standing for long periods of time because he's still not convinced that I'm fully recovered, so I beg your understanding and deliver to you seated.

I'd like to tell you a little bit more about the environment I work in, not because I believe for a minute that you gave up your time and money to hear about me but rather because I want to give you a sense of my perspective if you will, even my biases, so you have a framework for understanding why I'm looking at things from a certain point of view, so you're certain to know who I am as a speaker.

For many years, I worked in the Business and Science Department of the Phoenix Public Library, where we relied very heavily on print sources and were beginning to make transitions to electronic media both on-line and CD-ROM as tools for addressing investors' information needs. Last year I made a transition to the University of Phoenix, which is a nontraditional university that specializes in degree programs for working adults. The flagship campus is of course in Phoenix, and that's my jurisdiction. There are campuses throughout the western states in a variety of other cities.

One of the decisions that the founders of that university made was not to build a traditional print library, and that decision has not been without its controversy, and, I will be the first to admit, it's not a decision I one-hundred-percent endorse. There are certain cases, particularly with some of our non-business programs, where there is a limitation on the electronic availability of information that we really could use more in the way of print resources. Nevertheless, that's the hand I've been dealt, and I'm playing it to win as best I can, and I've begun through that perspective to see some advantages to electronic media that I never really thought about in a traditional public library reference world before. There are obvious advantages, such as the increased power of searching and the availability to, say, look for only those companies with betas only a certain number, only in a specified SIC code. I mean, doing that with print resources is a tremendous investment of time and your frustration. So the searching power of electronic media and the currency of electronic media, those are the advantages that we know all too well. But the biggest advantage I found being in a managerial role and budgeting and looking at staff requirements has been something that you hear talked about a lot in manufacturing but not so much in information retrieval and what we do professionally and that is just-in-time principles.

Now certainly, since the majority of you work in some kind of business librarianship/business information retrieval capacity, you're probably familiar with the idea of just-in-time manufacturing, where you try to have your suppliers bring the parts to your loading docks at the moment you need them for assembly into the final product, hopefully not a minute earlier or later. The advantage you gain by doing that is that you can keep minimal or zero inventories on hand. So instead of having to rent huge amounts of warehouse space and provide climate control and security and all the other attendant factors and costs that go with that, you instead get the parts in just as you need them, and I think there are a lot of things that libraries specifically can learn from JIT, as it's commonly known, and that is that we find our higher costs are often associated with trying to archive everything that could possibly be needed whether it's actually going to be needed down the road or not. And most of us have probably heard about studies, I think there was a famous study I heard about when I was in library school about a high-powered research library, only 50% of the circulating collection had ever been signed out. Now looking at this from a traditional point of view, that's really not a bad statistic because the rationale given is "we have all this material on the shelf should someone ever need it. We want to have the resources at people's disposal." Well true, but the cost of buying those resources is tremendous, the cost of hiring a clerical staff to reshelve them to maintain them, providing climate control and preservation efforts to keep their integrity together to keep them lasting a long time, providing security, theft stripping, guards, video surveillance, whatever you need to keep them from walking out the door as we all do.

All those costs really add up, which is why I think in this era of tremendous belt-tightening that we've all felt regardless of our institution, we need to look at electronic media not really as this high-priced sort of Ferrari of information services, this very fancy high tech way, but instead as a way of reducing our inventory costs, of getting information when we need it and only in the quantity we need rather than having it taking up valuable shelf space and valuable staff time.

So in a nutshell, that is my perspective on the issues and if it seems that I'm speaking a lot about electronic media and it seems that maybe Mike has spoken a lot about electronic media, that's part of the reason. You don't necessarily want to have investment reports on every publicly traded company on your shelves when you can get it in a timely and efficient manner and just pay for the information you use. So that's the principal advantage I see and I urge you as you listen to us and as you look at products you're evaluating for your institutions, when you compare an electronic product to a print product, don't just look at price, look at cost. What I mean by that is, don't just look at the manufacturer's price that is going to be charged to you by the vendor. Look at all the staff time that is involved in maintaining that product, look at security issues, etc. And you may find in some occasions that that equation will favor print. I certainly don't discount that possibility. But you may find on other occasions that it favors electronic media even when the list price of the electronic medium is much higher. So again I urge you to take that broader perspective.

When this program was originally conceived, I think that the dichotomy they set out was that Michael would talk about academic library sources and I would talk about public library sources. Well I think after just a few telephone discussions, we decided that that was somewhat artificial. I totally agree with Mike in that the distinction between public and academic libraries blurs tremendously in the business subject area to a far greater extent than in many subject disciplines. So we quickly decided that was a somewhat artificial distinction and that maybe we would talk more about approaches to service in each type of institution and find another way to divide the labor on looking at sources and what we came up with a little more is that he would focus more on doing sources and I would focus more on analytical. I think we've since learned that that distinction is somewhat artificial as well. At that point we just threw up our hands and said "Fine, we'll just do it this way. You cover this, I'll cover that. So if there's a little duplication between us that's inevitable from any attempt to divide labor in this way."

In looking at the public library as a forum for investment information, I think we have to look at who our market is and what kind of market share public libraries are getting. I think there's a lot of variability in both. The first thing I'll say is that the market for investment information probably goes well beyond the people who are coming through public library doors and investing their own money as individuals in stocks, working with a broker of some sort, perhaps purchasing government securities. Because really all of us are investors whether directly or indirectly. Even if you're just part of a major state employee pension fund or part of TIAA-CREF or any major retirement fund. You are an investor indirectly. You may not be managing the portfolio, you may not be calling the shots, but you may have an interest in that information and you may be affected by events in the financial markets in ways that you could not have contemplated before. So the market for who is looking at investment information whether through public libraries or other venues is really tremendous, and public libraries need to think two questions. First of all, how much of that market are we getting? And second, how much do we want to get? And I give you that second question because although we might like to think ideally that we want 100% market share--we want every individual investor of every type walking through our doors to use our resources--there is another strain of librarianship that is a sort of fear of success and that is "Well if everyone uses this service, we're going to be overtaxed, we won't have enough staff, we won't have enough resources, we're going to have to scale back what we do," and that's an understandable fear.

Virtually every academic and public institution in the early 90's has seen budgetary shortfalls of one sort or another. We've had to triage services, place priorities, perhaps restrict hours, cut back serial subscriptions. All of us have had to deal with it in one way or another. The inevitable outcome of having to make painful decisions like that is that you're forced to say, "Do we really want to serve everyone's needs for every purpose or do we instead want to figure out what are our crucial markets, how do we address those and will the other people go to end user resources or will they find the information through other channels?," a legitimate question to ask. So in looking at whom the public library serves and who it doesn't serve all the time, that's not necessarily a criticism, it's more food for thought. It's "Do you want to get these other investors as part of your market and if so, how can you do it in the most cost effective way?"

I've written down on Section One of my outline here, just some thoughts as to who is typically reached by public libraries and who is typically not. That is by no means a comprehensive list, it by no means applies to every institution. It's a reflection based on my own experience at Phoenix Public Library. As you know, the city of Phoenix is ringed by several high profile retirement communities such as Sun City, Sun City West, and although the demographics in the Phoenix metro area as a whole are quite young, those retirement communities out on the fringes contributed a substantial amount of our clientele for investment information. Typically because retirees will have some money on their hands, whether it's savings or a lump sum distribution from some sort of retirement savings, and they typically have a great deal of time on their hands so they can make the journey from an outlying retirement community 25 miles to downtown Phoenix to use the Central Library; they can wait if someone else is using a resource; they can invest the time that others may not have. The people that you may not be getting in a public library setting again may be people who are working professionals. They may be investing their own funds, they may just be tracking the performance of a 401K that they're part of. They may want to look at how their retirement savings are doing. Those people you may get more selectively. Those people may have the time to go to their neighborhood branch, but don't necessarily have the time to make it downtown to a central library. They may want to get in and out quickly because they may be trying to do five errands in one hour and have their kids at their side and any of those difficulties you're acquainted with. Those people may not always be captured by public library efforts and they may turn in greater numbers to end user resources.

I want to talk about end user resources because I see them as both a competitive pressure and an opportunity for libraries--that is, I think they can work both ways. We can throw up our arms and get very alarmed and say, "Well no one's ever going to come to the library any more when they can just go through Prodigy and get this type of information." Or we can say, "This is an opportunity." We can make people aware of end user services, we can help add value to them or in times when our budget is tight and we need to constrain what we do, we can use these as a way of almost outsourcing. We can say, "We're going to refer you to this source because it can get the information to you more efficiently than we can in this particular case."

Now there are a lot of constraints with traditional reference service that have turned people toward end user resources. Obviously the first one is immediacy. If you're looking at your portfolio at 3:00 AM because you have insomnia and, as Professor Bruce referred to, "you're up all night worrying about the stock"--something you shouldn't be doing, but may perhaps be doing--obviously you can't journey to the library at that time to check. Yet, if you have access to an end user on-line service or if you have your own subscription to various financial publications you can check it at that point.

Another issue is confidentiality. Depending on the acoustics and how your reference area is designed, you may have people who are reluctant to talk about their personal financial planning when you have a line five deep of people waiting for service behind them which is certainly not an uncommon experience in any institution that I've been with.

Access is another issue. You may have perhaps one copy of Morningstar and ten people waiting to use it. Again, that's a very common experience. Working at Phoenix Public, we had waiting lists for many resources.

And the fourth is ease of use, and that really just depends on the level of reference service you're able to provide. Again, Mike referred to different levels of service. It may be possible during off-peak times to give someone fifteen minutes of detailed explanation about various sources. On the other hand, at peak hours it may be all you can do to sort of grunt and point, " Value Line's over there." And I don't endorse that type of reference service but to be realistic, we've all dealt with it when there are just so many people on the phone, so many people in person, that that's what we have to do. So certainly, even in the best managed libraries, there are limitations to traditional reference service and a clear explanation of why people will use end user products a lot.

Now I've already spoken about some of the more obvious ones--those are your end user on-line services--the ones that may cost, say, $12.95 a month. No one is going to pretend that they offer the same level of power and search sophistication that Dialog and Mead Data Central or any of the commercial services do, but they are services that people can use for basic information needs on investments to get maybe current news headlines on various securities that they're tracking, to get current price quotes in near real time if not real time. There are certainly a lot of basic needs that those can meet. I put on the handout some of the most familiar ones, but it seems that this is a burgeoning market--that you're hearing about new trends all the time. A lot of you, if you're reading the press on this issue, may have heard about Apple's new E-World service that has just been unveiled. Ziff is planning a service that it's getting into, and there's certainly a lot of other things in the pipeline. Flying here yesterday, I actually came across something I hadn't heard of in an issue of Forbes, and I tore this page out of the magazine. I got some dirty looks from the flight attendants, and then they realized because I am an ethical person and into preservation that this was a magazine I had brought along and not one of the airline ones. But it's about a source called "Lawyers Money Network" which apparently gives you software, flat fee pricing and allows you to access an on-line clipping service that automatically retrieves news items of interest to you based on your investment priorities, allows you to get near real time quotes and a lot of other information. Another nice factor with it is you can integrate it with personal finance software packages such as Quicken and sort of merge the information you're getting on your investments with your own logs on what you've invested in, shares, prices, etc., and get a kind of comprehensive picture. Well, that's certainly a product that's going to appeal to a lot of people.

There are also audio text services such as... (Dow Jones???) By audio text I mean 900 numbers where for a price per minute you can get again real time quotations, you can get news headlines--that's certainly popular--and if you look in the B Section of your Wall Street Journal you'll see a lot of information on the different services that Dow Jones offers. That's not to say there aren't competitors--there are a great many competitors. I'm just offering the Dow Jones services as a good example. Using the keypad on your phone, you can actually key in the ticker symbol and get the quote. I know at Phoenix Public Library, we were under such constraints during the really lean years of the recession a few years ago that we had to curtail offering quotations, stock quotes, over the phone. We just didn't have the staff available to look them up and read them over the phone. And one thing that I urged us to consider as an alternative was referring people to this, saying, "We can give you two options. You can come down to the Central Library and look at our resources or if you want something quick and convenient, you can call this 900 number. There are costs of course, but it will give you the information instantly."

Another rapidly growing area in user applications is fax back services, services where you can, either by speaking to an operator or just by using a keypad to key in certain information, get something faxed to you instantly. Again, there are a lot of people doing this. I know S & P is now making Research Reports available on a fax back basis. And I will talk a little about applications with deposit accounts for that as we go on.

There are also a lot of print services such as Value Line that are marketing to end users. Now the fact that there are so many end user services doesn't mean that we have to throw up our hands and give up. I think we can add a lot of value to end user services. In some cases we can put them in-house in the library and say, "If you don't have access to this on your own, you can access it through us." That could be on a cost recovery basis, it could be on a basis where the library absorbs charges depending on financial circumstances. But either way, it promotes the library as a technologically up-to-date facility, a place that isn't afraid to refer people elsewhere, to outsource when necessary. And I've even put something down here about brokering end user products. By that I don't mean marking them up and passing them on at huge cost. I don't mean trading them or anything that could cause legal or financial concerns. What I mean by brokering is offering it in-house in addition to referring people to it. If you find that you don't have the money to have S & P Reports on all the public companies on your shelves--you don't want that loose-leaf subscription--well maybe you can just broker the fax back service; that is, you can establish a deposit account or a draw down account with an opening deposit of $1700 and just have the reports you need faxed to you at the time you need it. And again, I don't mean to single out Standard and Poor's as the only one doing it, it's just a current example I have. That sometimes you may find an on-demand service, whether through Internet delivery, fax delivery, what have you, may be better than having it all on the shelves at once.

So with that in mind, I think there are a lot of opportunities for public libraries, and as I go over some of these major analytical sources I want you to keep in mind that almost all of them are offered with different pricing and delivery options. For the major library that uses these resources consistently, you may find that purchasing the CD-ROM or purchasing the print is your best option. On the other hand, if you're in a small branch library, if you're chronically under-funded as we all are, if you have any other problems of that nature, you may want just-in-time delivery. You may want those reports faxed to you, or delivered via e-mail or downloaded through a traditional on-line service at the moment you need them and not a minute before or a minute later.

I've listed some major analytical sources, due to time constraints this is by no means comprehensive, but certainly we know Standard and Poor's and Moody's as two major analytical services. If you've worked in the public sector, you certainly know what it means to have people fussing at budget time about whether their Moody's rating or their S & P rating has gone up or down. Certainly that's the lifeblood of creditworthiness in the public sector.

A lot of the products that are offered by these two vendors give you in-depth pictures of financial circumstances. They give you descriptive information as well as ratios to tell you the reasons behind the numbers. And that's the principal advantage I see with things of that sort. Obviously with both of those vendors you have a longstanding reputation in the fields--a certain reputability that is associated with the information and a high level of brand name recognition that will go over well with your clientele. And that is an important factor to consider. If someone may ask, very often you know people ask by brand name, they say, "I need Moody's, I need Standard and Poor's, I need Dun and Bradstreet," and often that helps your credibility. There are a variety of options here. I mentioned the Corporate Descriptions, S & P Research Reports. Again you get S & P Reports in loose-leaf form that's familiar to us, but you can also get various delivery options. With Moody's we certainly know the Moody's Manuals, which are very in-depth, and one of the things I want to stress with Moody's Manuals and some of these other resources is that investments aren't just stocks; as Professor Bruce mentioned, there are bonds, a variety of other government securities, and you can sometimes get good coverage of those in these sources, or you may be looking at the bonds issued by a school district or an airport authority or some quasi governmental entity. And you're not going to find a standard 10K for that entity but you will find some analysis through these services.

There are loose-leaf services such as Value Line. There are equivalents for mutual funds such as Morningstar, various products along those lines. And of course, maybe a higher level of service is Investext. Investext is known as an expensive service, but as we'll cover in the afternoon session, it gives you a lot of investment analysis from various brokerages, looking in-depth at, again, the reasons behind the numbers and the outlook for the industries and the companies in the long run. In addition, there are investment newsletters, and it would take me a whole day to tell you about investment newsletters. They're very problematic because again, different customers will have ones they love and different ones they hate. What I would suggest is that you listen to your customers carefully and maybe use the Hulbert's resources to evaluate which ones are closest to the mark most often and look at them. In addition you'll have different people who have partisan feelings about chart services, long term values, trendlines--some love them, some hate them. That's something again where you have to listen to your clientele. And the final thing I listed here, again keeping in mind that not all investments are stocks, is the idea that some people may have annuities. They may have life insurance policies with cash values, and you need to have insurance rating services around as well. I've listed 3 there that I'm personally familiar with; again, there are others. And just like with newsletters, there are very strong groups that are in favor of one service over the other, so it's a tricky thing to deal with.

That is a very brief overview of the resources available, and hopefully this afternoon and in looking at your case analysis you'll be able to explore them in more depth. I've listed some recommendations at the bottom of "Public Libraries." The best way I can summarize them, because I know we're out of time, is very simply: be aware of your competition, but don't be afraid of it. Having end users go to an outside source isn't the end of the world if you're strained beyond your resources just to provide for your existing clientele. On the other hand, if you do have room for growth, if you do want to draw more individual investors into your library facilities, then look at ways that you can offer and promote end user products in addition to the more high powered products you have there. As a way of making people aware of the information out there and aware of your roles as librarians in facilitating access to that information. I'd like to say more, but obviously we've got a full day ahead. Hopefully we'll come back to some of these questions in the afternoon.

Thank you.

bullet Demystifying 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.