Web Sites Give Investors Advice

The Reese Report (www.reesegroup.com) summarizes and tabulates investment recommendations from articles in leading financial magazines and Web sites, including Barron’s, Money, Kiplinger’s, Investor’s Business Daily and Microsoft Investor.

The site offers a number of other features, most of which require a subscription. But the Reese Report is free. It doesn’t have a direct link on the home page, so click on Research Wizard, then scroll down to Reese Report and enter your stock symbol.

The articles are listed in chronological order in one of two sections — Bullish Reasons or Bearish Reasons — depending on the nature of the guru’s comments. If an article has both bullish and bearish arguments, it is listed in both sections.

Each listing shows the publication date, the guru or gurus being quoted and a star rating for each guru.

The stars indicate the Reese Group’s opinion of the accuracy of the guru’s previous picks. A five-star rating is best.

According to Reese Group, if you had followed the advice of five-star gurus since October 1995, you would have outperformed the Standard & Poor’s 500 index, on average, by at least 20 percent for the three- month period following each recommendation. The listing includes a short summary of the article and a list of reasons why the guru is bullish or bearish about the stock.

The Reese Group does a terrific job of summarizing each article. Instead of spending time reading the entire article, you can get the gist of them in seconds.

 

ANALYSTS’ ADVICE

There are many places on the Internet to view summaries of analysts’ earnings forecasts and “buy,” “sell” or “hold” recommendations for a stock.

My favorite is Yahoo (finance.yahoo.com ). These summaries are compilations of many different brokers’ reports. You don’t know which recommendations were made by a specific broker.

Nordby International’s site (www.nordby.com) is where I go to find individual analysts’ recommendations and earnings forecasts. Nordby provides customized stock market information to professionals. Its site is unusual, everything is free and there is very little advertising.

Nordby summarizes reports from 45 brokers, including most of the majors.

Select Broker Reports and enter your stock’s symbol to see a list of brokers’ ratings or earnings forecasts going back one year.

Each listing includes the broker’s name, date of the report and a short summary. For instance, when I checked Microsoft on July 4, the most recent listing was from Goldman Sachs on July 1, reiterating its strong “buy” rating and increasing its earnings forecasts for 1999 and 2000.

The listings are in chronological order, and I find it interesting to review the ratings and comments from several months back to see who was right and who was wrong.

 

MOMENTUM INDICATOR

Each analyst covering a particular company writes reports that are forwarded by brokers to thousands of investors, creating awareness of the stock. Consequently, investor awareness often equates to the number of analysts following the company.

Ultimately, stock prices follow the law of supply and demand. Since the number of shares available for trading doesn’t change very often, increased demand drives share prices higher.

Nordby uses this relationship to create a momentum rank. The Nordby Momentum Rating is based on the number of “buy,” “sell” or “hold” ratings issued for a company. “Buy” ratings add to the score, while “hold” and “sell” ratings subtract.

You can look up the momentum rating for any stock or you can view the top 25 ranked stocks. Nordby says, “Any stock with a score of 20 or higher deserves a second look.”

The gurus covered by the Reese Report, and the analysts followed by Nordby are human beings, subject to potential conflicts of interest, biases and inconsistencies of thought. Wouldn’t it be nice to have a methodical stock evaluation system not subject to human quirks?

 

VECTOR VEST FORMULA

Vector Vest (www.vectorvest.com ) uses a computer program to analyze a combination of fundamental and technical factors to generate a “buy,” “hold” or “sell” recommendation for most listed stocks.

The Vector Vest formula relies heavily on the stability and consistency of historical earnings, earnings growth and stock price performance to establish value and safety ratings for a stock.

Those factors are combined with earnings forecast trends and recent stock price performance to come up with “buy,” “sell” or “hold” recommendations.

Since Vector Vest’s business is selling programs using the same formula, free access is limited. Visitors can use the program at no charge to analyze up to three stocks each day.

To use it, click on Free Stock Analysis and enter the stock symbol. Vector Vest displays a lengthy computer-generated report on the stock, going into considerable detail on how it applies all factors involved in the analysis.

Vector Vest’s “buy,” “sell” or “hold” recommendation is buried smack in the middle of the report. Scroll down until you see the paragraph titled “Recommendation (REC).” That’s the bottom line.

If you want to read more, the second most significant paragraph is “RV (Relative Value)” near the top of the report. Relative Value reflects Vector Vest’s long-term view of the price appreciation potential of the stock. Third in importance is “RS (Relative Safety),” delineating Vector’s view of the risk in the investment.

These sites offer useful insights to help you analyze a company. However, they’re not intended to replace your own research. You still need to do that.