determine its profit margins. The cash-flow statement will reveal how much money the company is really spending.
“I probably wouldn’t have lost my shirt in technology [in my 401(k)] if I had learned to value the quarterly reports. Before, it was just extra mail. But a quarterly report can help you foresee sudden changes in the market, especially for high-risk investments,” explains Britton who has since reallocated her contributions to growth and income mutual funds.
Stock market and industry analysts write reports that include opinions about the stock and its vital statistics such as estimates of future earnings and profits. By matching the analyst’s quarterly estimates against a company’s quarterly earnings statements, you can gauge whether a business and its profits per share are meeting, exceeding, or underperforming expectations. You can also check your local library for Standard and Poor’s Stock Reports and The Value Line Investment Survey.
Press releases and news
“By paying attention to such information as annual reports and prospectuses, you can find out, for example, when a portfolio manager shifts investments within a mutual fund, which can effect diversification across your investments,” says Christine Peregrine, a financial advisor in Chicago. As a rule, you don’t want any two mutual funds to have the same top 10 holdings, she explains. And that’s sound advice for a proactive investor.