Tuesday, June 08, 2004
I've been an Investors Chronicle subscriber for over two years. An excellent magazine for pointing me in the direction of companies to research further. When a listed company reports results, the Investors Chronicle publishes statistics every investor needs, price-to-earnings ratio, dividend yield, assets and debt. These numbers are calculated from the results statement, if the Chronicle points out a software company trading at thirty times annual profit, I'll move on to find a cheaper offering, saving me ploughing through company reports and getting the measure of the company myself.
The Investors Chronicle is better known for its share tips section. Normally approximately five companies feature, a page is devoted to each and the magazine concludes buy/sell.
Now, if you have been reading the magazine for as long as I have you may have noticed that irrespective of market conditions, the BUY recommendations in the Investors Chronicle outnumber the SELL recommendations, typically by four to one. Even back when the FTSE-100 was trading almost fifty percent higher and shares looked more overvalued than at any point in the previous decade, the IC persisted, with all the gusto of a Tunisian Rolex salesman that bargains in the UK stock market were legion. Blatantly, more opportunities to sell existed, so why weren't the Investors Chronicle filling their tips section with SELL recommendations?
The answer lies with the interests of the Investors Chronicle's biggest advertisers, the stockbrokers. Brokers comprise a huge percentage of advertising revenue at the Investors Chronicle. In turn, brokers revenue is generated through customer trades, the buy and sell orders people like myself ring and request. An Investors Chronicle recommendation will generate an extraordinary level of market interest and in the case of smaller companies, can result in significant price changes on the day of publication. This adds up to a lot of extra commissions for the brokers every Friday morning. However, SELL recommendations produce a fraction of the trades buy recommendations do as investors cannot sell shares they do not own.
This is the crux of the anomaly between media BUY and SELL recommendations and has (finally) led me to the entire point of this blog. Vested interests. Any investor must be fully aware of the interests and motivations of any stock commentator, participant and so-called expert. The main culprits being fund managers and stockbrokers. These people consistently talk up opportunities for investors even when any upside is limited, all with the intention of generating sales. Then there is the bulletin board cheerleader, who has a vested interest in galvanising the public into buying shares in speculative small cap stocks that he might exit later at a profit. In short, believe nothing.
As of today, there is an email link on Artful Investing where I may be contacted with any questions, complaints or comments. I promise to treat all communications in complete confidence but would like to use this facility as an inspiration for blogs in the future, where I might answer your questions in the blog or by mail.Email The Artful Dodger.
At this point the cynics amongst you may be wondering just what my vested interests are and whether I can be taken at my word. My interests in writing are detailed in my innaugural blog here. Can I be trusted, however? Why of course I can, after all, I am The Artful Dodger.
The Investors Chronicle is better known for its share tips section. Normally approximately five companies feature, a page is devoted to each and the magazine concludes buy/sell.
Now, if you have been reading the magazine for as long as I have you may have noticed that irrespective of market conditions, the BUY recommendations in the Investors Chronicle outnumber the SELL recommendations, typically by four to one. Even back when the FTSE-100 was trading almost fifty percent higher and shares looked more overvalued than at any point in the previous decade, the IC persisted, with all the gusto of a Tunisian Rolex salesman that bargains in the UK stock market were legion. Blatantly, more opportunities to sell existed, so why weren't the Investors Chronicle filling their tips section with SELL recommendations?
The answer lies with the interests of the Investors Chronicle's biggest advertisers, the stockbrokers. Brokers comprise a huge percentage of advertising revenue at the Investors Chronicle. In turn, brokers revenue is generated through customer trades, the buy and sell orders people like myself ring and request. An Investors Chronicle recommendation will generate an extraordinary level of market interest and in the case of smaller companies, can result in significant price changes on the day of publication. This adds up to a lot of extra commissions for the brokers every Friday morning. However, SELL recommendations produce a fraction of the trades buy recommendations do as investors cannot sell shares they do not own.
This is the crux of the anomaly between media BUY and SELL recommendations and has (finally) led me to the entire point of this blog. Vested interests. Any investor must be fully aware of the interests and motivations of any stock commentator, participant and so-called expert. The main culprits being fund managers and stockbrokers. These people consistently talk up opportunities for investors even when any upside is limited, all with the intention of generating sales. Then there is the bulletin board cheerleader, who has a vested interest in galvanising the public into buying shares in speculative small cap stocks that he might exit later at a profit. In short, believe nothing.
As of today, there is an email link on Artful Investing where I may be contacted with any questions, complaints or comments. I promise to treat all communications in complete confidence but would like to use this facility as an inspiration for blogs in the future, where I might answer your questions in the blog or by mail.Email The Artful Dodger.
At this point the cynics amongst you may be wondering just what my vested interests are and whether I can be taken at my word. My interests in writing are detailed in my innaugural blog here. Can I be trusted, however? Why of course I can, after all, I am The Artful Dodger.
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