Information on Stocks and Bonds

Determining how you want to invest your money in the market can be an alarming exercise at first, especially given the vast amount of choices and investment tools. The two most common are stocks (equity) and bonds. As a result, information is critical to investing wisely.

Stocks: Buying Ownership

Information on stocks can easily be found starting with the companies that issue the stock in the first place. Every corporation worth its salt has public information on the service or product it sells, and how it is run.

An appropriate start for stock information is the company's web page, but even more important are its financial reports. Every corporation that has stockholders has to produce a regular report to its shareholders. These reports are chock-full of data, explanations, forecasts and news, both good and bad. They come in quarterly and annual formats. Earnings-report meeting transcripts also provide similar data and metrics.

Stocks: Outside the Company

Secondary sites are also critical information aggregates for stocks. They provide historical charts, company summaries, analyst statistics of purchase opinions and, most importantly, they consolidate independent reviews and reports on the particular stock/company. This aspect gives you a second opinion vs. the sometimes "rosy" picture you may get from the direct company reports. Many secondary sites also provide filters by which you can sort stocks and compare them against each other. Let's say you want a stock with an 8 percent return and a 3 percent dividend. There's usually a filter that will run those parameters and identify which stocks meet that criteria. Some sites are pay-for-access, but there are plenty that are free and easy to use by the individual investor.

Stocks: Industry in General

Industry reports provide a third avenue of stock information. Unlike the company and analyst reports that may focus on just one company, industry reports give you the bigger picture. They illuminate what's going on with the entire industry market. You can find out if issues affect only a few similar companies, or if the entire industry is suffering the blues. Good sources include general business websites, industry watchdogs, industry magazines and periodicals, and financial television shows.

Bonds: Making a Loan to a Corporation

Bonds in their most basic description are loans; you're lending your money to a company and in return that business will pay you money after some time plus a set amount of interest. Of course, the trick is finding the right company to lend to that doesn't turn around and default on your bond loan. Unlike a bank, there is no backup if the company fails to pay back your bond. Your money is lost.

For good reason then, finding information on bonds is critical to making the right investment choices. Again, companies provide information on their bonds, but they don't necessarily put it all in one place. You have to piece together the company's performance and risks, and then weigh them against the probability of the company still being solvent in the future.

Bonds: Other Sources

As a secondary information source, most brokers will provide you summary information on each bond sold, but not much more. You get the value, how many lots are for sale, the original coupon (interest) rate, and how much is left to earn in interest before the bond matures (Yield to Maturity). Most importantly, the basic summaries tell you if a particular bond is callable or not (when a company can pay back a bond early or not).

However, the most valuable piece of information is the independent rating of bonds by the rating agencies. These companies do all the bond homework for you. The two big names in this rating business are Moody's Investors Service and Standard & Poor's. Their scores on each bond range from high grade to junk-bond status. The score itself indicates how reliable the company is behind the bond at paying it back when the payment is due. Obviously, those with lower ratings have to offer larger coupon rates to sell compared to high-grade bonds.

Company information is readily available for both bonds and stocks, but it is not necessarily the easiest to understand. Use the companies, secondary sources and rating agencies to give you the whole picture and invest to win.

References

• Morningstar Stock and Mutual Fund Reports
• Pimco Bond Research
• Seeking Alpha: Blog Commentary on the Market

Resources

• Reuters Industry Reports
• Jim Cramer's Mad Money Recap
• Minyanville