Trader Tommy Kalikas works on the floor of the New York Stock Exchange.Richard Drew
Successful investing doesn't have to be complicated or require a lot of effort. Buy a handful of low-cost exchange-traded funds or mutual funds, make regular contributions and watch your money grow. Simple.
But if you want to keep your expenses as low as possible and have complete control over what you invest in, there's no substitute for owning a portfolio of individual stocks. But there is one main drawback: It requires work.
That's where today's column comes in. I've assembled a list of tips and tricks that will help you get to know your companies better and stay on top of important corporate developments. The good news is that, thanks to the internet, it's a lot easier than it used to be.
Annual reports
In the old days, if you wanted to read up on a company, you had to ask for a copy of the annual report to be mailed to you. Now, you can find it instantly on the company's website. Annual reports are often promotional, but they're a quick way to familiarize yourself with a business, and they often include historical charts of earnings, dividends and other important financial metrics. Also be sure to check out the management discussion and analysis section, which goes into greater detail about the company's operations, performance, opportunities and challenges it faces.
Investor presentations
Investor presentations – which companies use to market their story to institutional investors – are another quick way get up to speed on a stock. Supporting materials for these presentations are usually archived in PDF format on a company's website and typically consist of slides with colourful charts and bullet points that cover the main themes of interest to investors. Unlike annual reports, investor presentations are usually updated throughout the year, so the information remains current.
News alerts
Want to stay informed about quarterly earnings, dividend announcements and other corporate developments? Most companies offer e-mail alerts, which deliver information directly to your inbox. (Warning: If you own a lot of companies, you could spend all day reading e-mail.) Following companies on Twitter is another way to receive news, but be prepared to wade through public-relations announcements about all the good things the company is doing in the community.
Conference calls and transcripts
Investors can usually listen in live to, or access archived recordings of, a company's quarterly conference calls with analysts. If you're pressed for time, reading a transcript of the call is more efficient: Some companies make transcripts available online, and there are a few third-party websites that provide them. (A google search is often a good way to find what you are looking for.)
The investor relations department
If you have a specific question about a company whose stock you own, or if you're thinking about investing but need to clarify something, it's often a good idea to call or e-mail the investor relations department. That's what it's there for. Some companies are better than others about getting back to the public, so be persistent. Also be sure to state clearly what you are looking for. The more detailed your question is, the easier it will be to answer.
The financial media
At the risk of tooting my own horn, financial media such as The Globe and Mail's Globe Investor provide commentary and analysis that you won't get from the company itself. For that reason, well-researched news stories and columns are an essential part of an investor's toolkit. Niche websites and blogs are also useful. Stockchase.com, for example, compiles public comments that portfolio managers make on BNN, providing a quick snapshot of opinions on widely held stocks.
Putting it all together
If you took advantage of all the suggestions here, you would have no time for anything else. The important thing is to pick a few tools you like, and make use of others when required.
One final tip: If you stick with blue-chip companies that have sustainable business models as well as a track record of raising revenue, earnings and dividends, you'll spend less time monitoring them and more time enjoying the fruits of your investments.
John Heinzl