Investing in US markets

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28. Broker research

Online brokers sometimes offer their clients third party research, especially reports prepared by investment bank analysts. This can be either a standard or premium (i.e. paid-for) service.

Independent content providers such as Multex (www.multex.com) also offer research of this type. Sites like this provide a certain number of free research reports, generally short comments, from a range of brokers. They also give access to longer reports on individual companies that can be paid for.

Some US investment banks also offer some research for free (often economic commentary and market strategy). Company reports are sometimes also offered, although users may have to register and provide personal data to gain access to them.

Broker reports are a two-edged sword. There has been debate of late about the way in which analysts' views might be influenced by other factors, such as the possibility of their firm gaining corporate finance business with the company in question.

In general:

• Be aware that the firm publishing the report may have a corporate advisory connection with the company concerned, or may be seeking to establish one.
• Don't take too much notice of the recommendation made by the firm or the price target set in a report. These can change without warning.
• New disclosure regulations mean that analysts are much less likely to have any better or worse information than the market as a whole.
• Analysts are fallible: better to trust your own judgement about the merits or otherwise of an investment.
• It is generally rare for analysts to publish 'sell' recommendations. A stock described as a 'hold' might be construed as distinctly unenthusiastic. 'Add' or 'Market Outperformer' often denotes a lukewarm buy recommendation.

1. Diversification 2. Opportunity 3. Special features of the US market 4. You are already investing abroad! 5. Opening an account to deal in US securities 6. Inputting orders 7. Cash management 8. Currency factors 9. Tax 10. Trading on margin 11. Short selling 12. Types of investment - introduction 13. Shares (common stocks) 14. Indices 15. Bonds 16. Offshore mutual funds 17. Exchange-traded funds 18. ADRs 19. Options 20. Researching US companies - the basics 21. National newspapers 22. Regional newspapers and specialist magazines 23. Business TV 24. Company annual reports 25. Corporate web sites 26. EDGAR 27. Financial portals 28. Broker research 29. Charts 30. Conclusion

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