Buffett: "I invest in what I know and in what I understand"

Warren Buffett, the world's richest man, is someone to whom all investors should listen and from whom they should at least attempt to learn. In an interview on CNBC this morning, Mr. Buffett spoke about his latest deal to partner with Mars in a purchase of Wrigley at $80 per share (I wrote a blog about that here). When asked about why he was interested in the company, his comment was quite refreshing. Well, he said, when compared to the balance sheets of Wall Street's banks, this is a company whose value I understand.

Coming from one of the world's most respected, and successful, investors, this should cause many investors to truly question what is going-on in today's marketplace. When a savvy investor like Mr. Buffett can't make heads-or-tails of what financial institutions are reporting in their reports, how can a retail investor hope to do so? Instead, invest in what you understand.

Mr. Buffett's joke about doing a 70-year taste test of Wrigley's products speaks volumes about how investors should make their own investment decisions. Just like you shouldn't buy foods whose ingredients you can't pronounce, don't buy stocks who's underlying business you can't describe in a single sentence (or paragraph). Simple.

Never mind a cut to 2%, how about a hike to 2.50%

On Wednesday this week, the Federal Reserve, headed by Ben Bernanke, will meet to decide the fate of interest rates for the next six weeks. The rate currently sits at 2.25% - 3% lower than it was just nine-months ago. Mr. Bernanke and the Fed have been very aggressive with their cuts to help keep the economy out of a recession. Today, however, with most people agreeing that the economy is already in a recession, what should the Fed do next? More importantly, with inflation concerns higher than ever, a further attempt by the Fed to keep this recession as mild as possible could come at an incredible cost a year from now.

The rising cost of fuel and, more recently, commodity prices have made living expenses rise for the average consumer. The Fed hasn't helped either. The lower interest rates have caused the American dollar to sink against the Euro and other currencies - as much as 7%! This too has caused import prices more expensive and driven-up costs for consumers. All these rising prices mean one thing: inflationary pressures.

Today's economy is being compared to that of the late 70s and early 80s more than ever. A lot of people are beginning to foresee high inflation. The only thing that has helped the Fed, and the economy, is the general believe by the American people that the Fed is doing (and will continue to do) all that it can to keep inflation under control. This belief may quickly vanish, however, if the Fed doesn't begin to deliver on those expectations. Why care?

If inflation does start to creep-up like a lot of people believe that it will, then it will need to eventually be brought under control by the Federal Reserve. In the 80s, Paul Volcker, then Fed Chairman, pushed interest rates up to the high-teens in order to bring inflation back from its double-digit levels. This, of course, sent the economy into a VERY deep recession. If Mr. Bernanke isn't careful, his successor will need to do the same thing because he'll certainly be out of a job.

As speculation mounts over whether the Fed's meeting will result in a quarter percentage point cut to 2% or stay-the-course at 2.25%, maybe the Fed should rather be considering a quarter-point hike!

Sky-High Commodity Futures Prices Not Good for Farmer?

It's counter-intuitive, I know. But the sky-rocketing prices of commodity prices have made things difficult for farmers. Logically, you would think that higher prices for their produce would make farmers ecstatic, and they are. Getting more for their output is always a good thing. The problem arises from what has been happening in the financial markets and understanding how farmers use those markets to protect their income.

Farmers are investors! It's true; although farmers have an unwarranted stereotype of being uneducated 'rednecks', reality is far from that.

First you have to understand that farmers plant their crops months before they'll be able to harvest and even longer before they'll be able to sell. This leaves farmers with a lot of uncertainty as to what they'll actually get for their harvest when they're sowing those seeds. To help hedge against that risk, farmers participate in the futures market - selling contracts on exchanges like the Chicago Board of Trade (CBOT). They do so in order to ensure that they'll be able to sell their crops at the price guaranteed by their contract - regardless of what the market condition is at the time of harvest. The problem is volatility.

So many new investors have entered the hot commodities markets that volatility in these markets has almost doubled over the past year. That doubling means a lot more uncertainly for those selling the contracts - farmers. What used to be a great way to hedge against uncertainty now has more uncertainty that the market for the crops itself. The market for crops such as grain and corn have been rising steadily for most of the past decade. This is the saving grace for farmers; while they may not be able to use the future contracts to protect future revenues, those revenues are more likely than not, to rise.

...Of course, then there's the whole problem that farmers face with the rising cost of fuel, but that's a story for another time.

Buffett, Mars & the 70-year Wrigley Taste Test

CNBC had a great interview this morning with Warren Buffett following the announcement that his firm, Birkshire Hathaway and Mars are teaming-up to buy Wrigley (yes, the chewing-gum company) for $$80 per share. It continues to amaze me how easy-spoken Mr. Buffett is given his success. No pretentiousness; no stuffiness; just a regular businessman doing  his thing.

They started the interview by asking Mr. Buffett why he wanted to buy $6 Billion (his firm's share) worth of Wrigley. His answer was fabulous: well, I've been doing a 70-year taste test of Wrigley's products and like their products. He goes on to make a very powerful statement: when you have the opportunity to buy a great company, take it. He couldn't help buy quoting Yogi Bear: "when you come to a fork in the road, take it!"

Mr. Buffett compared this deal with Lays' (the potato chip company) offer to sell to Coca Cola year ago. Coke passed on the deal and Lays ultimately sold to Pepsi Co., largely considered their best acquisition. Coke, Mr. Buffett says, made a big mistake. Wrigley is a geat company according to Mr. Buffett and the best time to buy it is when you can afford to do so. Period.

One more thing...

Mr. Buffett also made the following statement regarding the state of the economy: I think that we are in a recession and that it will be deeper and longer than people think. I don't think that he could have been more blunt, do you?

D-Day + 2 ...at least they're talking about the deal now.

I woke-up this morning to find that the Microsoft and Yahoo! deal was in the news once again. Nothing new, really, to report, but at least they're talking about it. I found it simply strange that nothing was said on Sunday when so much was discussed coming-up on the Saturday deadline for Microsoft's offer to buyout Yahoo!

Today, I heard an interesting opinion on the deal. Could it be another AOL-Time Warner? Could it be another dot-com deal orchestrated by Wall Street with no real business sense? I said it was an interesting opinion, but not that I agree with it.

AOL was doomed to begin with. When Time Warner bought it, it was buying a dying entity. AOL's success was on making the Internet accessible. Could anyone possibly argue that the Internet still needs to be simplified today? Furthermore, could anyone argue that there are not a multitude of alternative service providers offering equally (or better) solutions to get Internet-newbies signing-on to the web? AOL was slow to adjust its business and Time Warner paid the price. I don't believe that this is the case when it comes to Yahoo!

Yahoo!'s business is display advertising. The only problem that it's having is converting its traffic into great revenues. Microsoft is already in the same business, but offers a broader reach and richer-content that helps to keep users clicking on its sites. I believe that there exist true synergies between these two companies. Put differently, Microsoft + Yahoo! is worth more than each is worth separately.

UPDATE: Microsoft, according to those 'close' to the ground, is now saying that it's likely to be a proxy fight that they'll announce later this week.

1st Half-Marathon!

Today was the day. I ran my first, official, half-marathon. I've run 20km many times before, but never in an actual race. Let me tell you, 20km along the lakeshore in Toronto is not the same as 20km over rolling hills an hour north of the city.

With just 2km to go, my knee finally gave-out on me and I was forced to all-but walk the last couple of clicks. As a result, I fell short of my goal time of 1:45 and ended-up a whole 10-minutes slower. Disappointing, yes, but what really hurt was getting passed by men twice my age - no, I'm not exaggerating. If you run, you'll appreciate that my goal time (even my slower time) is not all that bad, but when someone 20 or 30-years your senior passes you on the last leg, it hurts!

It was a great event though. It was in support of a local hospital north of Toronto in Uxbridge and the volunteers and sponsors put-on a really nice show. The people were friendly, the medals were shinny and the post-race refreshments were, well, there. To those who made it happen, thanks from those of us who participated.

D-Day + 1 ...and no news on MS / Yahoo! deal?

Is it jsut me or does anyone else find the lack of any news on the Microsoft Yahoo! deal a little bizzare? Yesterday, the day of the deadline on Microsoft's buyout offer for Yahoo!, it's all we heard about. Today, I've listening to the radio for a couple of hours and ...nothing?

My best guess? Something is brewing behind the scenes. But what?

D-Day :: Decision day on MS & Yahoo! Buyout

Today is the day. Yahoo! is to make a final decision today on the buyout offer from Microsoft or face two possibilities:

1. A retraction of the bid by Microsoft, or
2. A hostile bid for Yahoo!

Personally, I don't think that either will happen, but I do believe that Microsoft cannot walk away from this deal. So, how do you reconcile this: an all-cash-offer. Microsoft's bid for Yahoo! is in stock; Yahoo! has been adamant that its offer is too low and Microsoft has been equally stubborn on its stance not to increase its offer. By offering an all-cash bid in lieu of its stock-bid, Microsoft could make its offer a little more enticing as well as offer Yahoo! an 'out' without forcing a hostile action by its soon-to-be owner.

Microsoft needs Yahoo! Google has already made its quasi-white knight intentions clear and Microsoft certainly cannot afford to let Yahoo! slip into the hands of its arch rival. It will be interesting to see what happens next from both a business perspective as well as from the perspective of a consumer.

I'm both a Yahoo! user and Google user. I don't really use MSN's search offer, but do enjoy its homepage as a news aggregator. A merging of some search and rich-content could very well help Microsoft take a dominant position in the market. In terms of display ads, the mere purchase of Yahoo! by Microsoft will make it bigger than Google in this arena, but I think that its true success will come from leveraging the synergies that these two future siblings can offer together in providing us lowly surfers with an even better way to spend our time online.

A market disconnect indeed!

I just got through reading an interesting article in the Toronto Start (read it here). To put things in context, here's a little excerpt:

The headlines continue to paint a dire economic picture. The credit crunch has forced global financial institutions to take major losses and slash jobs. Meanwhile, the U.S. housing downturn and crushing oil and gasoline prices have clobbered U.S. consumers, which promises to dampen Canada's already struggling manufacturing sector.

That pretty much says it all. I personally believe that rumours that the current recession is nearing an end (yes, we're in a recession) are largely overstated. In Canada, especially, the worst is yet to come. The impacts of the economic slow-down in the U.S. have yet to really hit us north of the border and when they do (they will) things will tumble hard.

I recently read some stuff on technical analysts' approach to investing and found it quite enlightening. The reason: they seem to see opportunity in almost every market situation, and for good reason. Many people (myself excluded) have made a bundle while others stayed on the side-lines (myself included) waiting for this bubble to burst. I'm sure that I'll take some satisfaction in being proven right, eventually, but it's still a little frustrating to see potential profits fall into the pockets of others.

Inflation and the Interest Rate, what's the deal?

So some of you have asked about the connection between interest rates and the rate of inflation. Why do the two always appear in the same sentence? Why do we care; what does it mean?

First, you have to understand that there are many definitions of the interest rate. What most people really mean whey the talk about the interest rate is the nominal rate. The nominal rate is actually the combination, itself, of a few things. Without getting too complicated, it's comprised of:

1. The real interest rate, and
2. The inflation rate

Ignoring other stuff, the nominal rate = the real rate + the inflation rate. Beginning to see the picture? No? That because you need to understand why you really care about the real interest rate, not the nominal rate.

The real interest rate is the return on your investment (or savings) that you expect to receive as compensation for letting others (banks, and borrowers from banks) use that money. Unfortunately, no one pays you real interest - they pay you nominal interest. The reason is that no one actually know the rate of inflation at a give point in time - only in hindsight and even then not all that accurately.

Let's say that the bank pays you 5% on your savings or investment(s) for one-year. Ignoring compounding for the time being, you expect to get $105 back a year later for an investment of $100. What if you find out a year later, however, that inflation over that period was 4% (like it is today!). An inflation rate of 4% means that it roughly costs you 4% more to buy the things you normally buy (your mortgage or rent, food, gasoline, etc.). So a year later you're only better off by 1%, right? ...actually, wrong!

We forgot about taxes. Yup, taxes.

It would be great if we got taxed on only the 1% that we're really getting a year later, but the government taxes us on the whole 5% (the nominal rate). To keep things simple, let's say that we get taxed at a marginal rate of 50%. Well, that would mean that our 5% has been reduced to 2.5%. So, now if we subtract the inflation rate (the rise in the cost of living), then we're really left with -1.5%. Yes, that's a negative sign ...sorry, it's not a typo.

So, now that we're clearer on what all the fuss is about, I hope that those boring discussions about interest rates and inflation will mean more to you... it should. Really.

Is there really a difference between 2.25% and 2.00%

Ok, so I studied finance and I know that there is a 25-basis-point difference, but I think that you and I both know that that's not what I meant.

The Fed (the U.S. Federal Reserve Bank), via the open market operations, helps to manage the swings in the business cycle by monitoring various economic indicators and pulling various levers to flatten-out the bumps. One of these levers, the most important one actually, is the interest rate (the Fed Funds Rate, to be precise).

When the Fed reduces the interest rate, it makes money cheaper - it makes borrowing money less expensive because those who do borrow, pay less interest. You have to ask yourself, however, whether a 0.25% further reduction in the interest rate will stimulate those who have been holding-off on an investment decision (like buying a home or expanding business operations) to suddenly make the leap. The answer is likely no.

The Fed's actions are likely less important that the reasons for its actions. People watch the Fed to learn of what top economic minds think the economy will do next (or what it's doing now). With almost 300-basis-points down in the last 9-months, I think that we all can accept that the Fed and all those economic brains think that the economy needs help. We got the message, trust me. Sending the rate lower yet will not drive-home that message any further; moreover, it could cause problems for the Fed in the medium term should it really need to pull on that lever harder, later. It's going to be interesting to see what the Fed chooses to do; it will be more interesting to see if the markets react at all to whatever it is that they do choose to do!

Earnings Expectations, it's a game...

You have to wonder why every CEO doesn't work themselves to death to keep expectations for their companies' earnings as low as possible ...at least coming-up on earnings announcements, as we are today. The lower the expectations in the weeks prior to an announcement, the more likely is the stock to see a rise following even a met-expectations performance outcome.

You just have to wonder if this isn't all just a game.

How are individual (retail) investors to interpret what they hear from analysts in light of how easily swayed the markets can be by the opinions of those in-the-know at the companies in which they invest? The answer is that any interpretation is likely to be wrong about half the time. Even those with access to more information on the actual performance of publicly traded companies get it wrong about that often ...just look at the track record of the best analysts of late!

As tempting as it is to get caught-up in the excitement of earnings season, long-term investing is likely the only way a regular-joe investor can protect themselves against the affects of the games played on Wall Street. There is a new push to see top executive earnings tied more to long-term performance than stock price valuations from quarter-to-quarter. Hopefully this alignment of interests between those who run these companies and the folks who invest in them will benefit us all.

Jim Cramer, on second thought...

Like a lot of people with a professional education in finance, my first impression of Jim Cramer of CNBC's Mad Money was... well, I'd prefer to keep my posts 'clean', so I'll keep those thoughts to myself. I have to admit, however, that I've watched the show for the past couple of days and it's forced me to rethink my admittedly elitist (read: snobbish) opinion. Mr. Cramer provides a valuable service to the investment community, and I'll tell you why.

In one sentence, he makes finance and investing exciting for the average joe.

I don't mean to demean the proverbial average joe. I sincerely mean it in a good way. A lot of people shy-away from personal finance - so much so that many people cringe at the very thought of opening a bank statement. Mr. Cramer, like him or not, has a knack for getting you excited about the mundane performance figures that you can get in any newspaper and on any financially-oriented website. The difference is that Cramer's associated explanations and opinions (right or wrong) make them more tangible. Rather than just seeing a 2, 3 or 4-letter combination ticker symbol, he makes you see beyond the facts and figures to what underlies the stock... the business.

A lot of people forget that these ticker symbols actually represent going concerns. Yes, it's true. When you buy a stock, you're actually buying a share in the business. The fact that Mr. Cramer makes people more aware of that fact deserves recognition. 

My Name is Nicholas Osinski and I'm a Mad Money convert.

CNBC's Nobel Special Picks a Candidate!

I don't know about you, but I was surprised to see anyone, let alone a Nobel economic Laureate back a presidential candidate. I can't say that I was surprised by the choice made, it was the fact that Joseph Eugene "Joe" Stiglitz chose to voice his opinion on national television.

Don't get me wrong, it was a pleasant surprise. To hear anyone to voice an opinion of which at least some people will disapprove is refreshing. No one ever seems to want to make a stand and you somehow never thing think that someone in such an esteemed position would want to pigeon-hole himself as even Democrat or Republican. 

On the other hand, maybe it's the fact that it was on CNBC that really surprised me. I suppose that I should be surprised by someone picking a candidate; this happens daily these days. Besides Cramer, you don't see too many people taking a stand on any financial security - no one wants to be proven wrong one-week later.

I suppose it's really the venue that got me and not so much what was said. In hindsight, I suppose that I'm surprised whenever I hear of anyone taking a firm stand on anything on CNBC. Everyone is too concerned with covering their ass and protecting their [ego] reputation.

To Joe, way to go! :)

US Economic Woes & the Wealth Effect

The U.S. economy is suffering. The reasons for an economic slowdown are never singular, but a lot of what is happening in the U.S. today has to do with the credit crunch: the lack of liquidity in the financial system that results in less investment dollars available for the activities that usually grow the economy.  On a personal level, this has mean fewer dollar available for home buyers, which in turn has led in lower demand for home buying. The consequence... home prices are have been falling and continue to fall. The strange thing this, for folks like me over the border in Canada, we have thus far been insulated from much of it. How long can that possibly last?

The answer has a lot to do with what is known as the Wealth Effect in economic theory. The theory is about how people make decisions in spending (consumption) and saving (and investment). As home equity represents the bulk of people's savings, a decrease in the value of their homes represents a decrease in their net worth ...or wealth. Moreover, because the vast majority of homes are mortgaged financed, there is a leverage effect that further enhances this reduction in equity and wealth. In other words, the more home prices fall, the faster is the reduction in individuals' net worth and wealth. So, how does affect the economy?

As anyone's net worth (wealth) is reduced, there is a growing need to save rather than consume. Lower consumption means lower spending at stores, which in-turn results in the falling sales and layoffs that we've all be hearing about in the news. The increased savings, however, instead of making investment dollars more available, are flowing into highly risk-averse alternatives and avoiding more risky (read mortgage-backed securities) because of the many mistakes made by the folks on Wall Street. The result is that we have lower spending, falling sales and investment dollars available only to the safest possible opportunities ...not for those new home buyers with short credit histories and budding careers.

So, what about us Canucks over the border?

Well, if you go back to the concept of the wealth effect, then you can begin to appreciate how there will necessarily be an impact on the Canadian economy, but also understand that there will be a delay. The delay is the result of the time it takes for companies to recognize the slowing demand for their products and services and to react by cutting staff. This rising unemployment combined with falling wealth will drive even further reductions in consumption ...on both sides of the border. The U.S. is our #1 trading partner. The question is not whether it will affect us here, but when. 

Bernanke and the Fed Overreacting?

I recently learned that Bernanke is a long time academic of the Great Depression. How much of a role does his extensive knowledge of, and interest in, this woeful period in our economic history play in the Fed's current actions and plans?

We're now hearing that the Fed may soon receive greater powers. This is coming hot on the heels of great activity by the Fed to supposedly bail-out our flailing financial system that would have otherwise caused the economy to collapse. Whether that is true or not, is another matter. The question at-hand is whether Bernanke's possible preoccupation with an incredibly difficult time in our history has resulted in actions by the Fed that were too aggressive. Moreover, are its new-to-be powers warranted, really?

"IF the financial accelerator hypothesis is correct, changes in home values may affect household borrowing and spending by somewhat more than suggested by the conventional wealth effect, because changes in homeowners' net worth also affect their external finance premiums and thus their costs of credit,"Bernanke said. 

The above quote from a Bloomberg article suggests that the Fed's actions are warranted in light of what could happen if things even begin to go in the wrong direction, which, admittedly, they have. The difficulty with economics is that there really are no certainties. It's a backward-looking profession that is constantly asked to forecast. Whether or not Bernanke is in-fact overreacting given his great interest in the Great Depression will only be know after the fact. What's more interesting that that proposition, however, is whether or not it's fair to credit him for his actions if he's prove right ...if it is after all, a best guess...

How connected is the economy with our financial system?

It's not exactly news to say that we read and hear about the economy on almost an hourly basis when things are not going too smoothly (as they are not currently), but what is unique about this particular period is how apparent the connection to our financial system has become. Was this not the case before or were we just not as aware? Personally, I'm of the opinion that it is the latter.

The financial system is the lifeblood of our economy. A growing economy needs credit; yes, it's that simple. Without, it wouldn't grow. Don't believe me? Imagine for an instance that you are looking to grow your own portfolio, business, ...whatever; what would be the first thing that you would want to do if you didn't have sufficient funds to do it on your own? You would borrow. Period.

Our economy is driven in much the same way. If companies cannot borrow, they cannot grow ...assuming, of course, that they lack the financial resources to self-finance. This, however, is not all that far-fetched. While everyone hears about the big boys on Wall Street, it is actually the small and medium-sized businesses that make-up our economy's backbone. It is also these businesses that grow most rapidly, create hundreds (if not thousands) of jobs for every one that a Fortune 500 firm does and ...most importantly in this context... it is these firms that need finance to keep them growing.

In today's economy however, the uncertainty has caused everyone to think twice about where they put their money. As your neighbor and they'll probably tell you that the safest place may very well be under the mattress! So, what's the solution? ...no really, I'm asking?

Bernanke Grapples With Greenspan as Volcker Scorns Fed Bailouts

I just finished reading a terrific article that summarizes what a few of the past greats in central banking are thinking today. From Volcker to Greenspan (who's book I'm just finishing) to today's Bernanke, the great comparison is made between the panic of 1929 and today's financial credit crisis. I highly recommend the article, which can be found here.

Here is a short excerpt to get pique your curiosity:

Bernanke, now the Fed chairman, has responded with the most-aggressive expansion of the Fed's power in its 95-year history. Since last August, Bernanke, 54, has twice cut interest rates by 75 basis points, made Federal Reserve loans available to investment firms for the first time since the 1930s, lowered the rates at which banks can borrow from the Fed and launched an unprecedented rescue of Bear Stearns Cos., the struggling investment bank. (A basis point is 0.01 percentage point.)

Could you imagine a financial system without the SEC? Who would send all the big-wigs to jail if it were abolished as the plans suggest? The answer; the Fed. That's right! The Fed is going to being seeing a growth in its powers from the significant increases it already received thanks to Sarbanes-Oxley.

Resulting from the Paulson Report is that the Fed will have the power to do anything, and go anywhere, it wants. On the one hand, you can certainly appreciate how this might work to keep the financial system, and those responsible for it, in-line, however, it's also a little scary to think of what may come as a result. What is it that they say about "ultimate power" again?

5-Year T-Bills = Sweet Spot?

A friend of mine was reading an article that essentially concluded that 5-year T-Bills were the way to go because shorter-term Bills were yielding rates too low and longer-term securities were too sensitive to inflationary pressures. As you might have guessed, this sort of logic is really flawed.

The thing that I find frustrating about this article is that it comes across a little bit like a sales pitch for some reason. In reality, no investor should be any better or worse-off by choosing a two-year, five-year or ten-year bond ...given all the information available today. You guessed it, that last part of the sentence is the kicker.

Given all the available information, the rates are the way they are because they include investor expectations of what will be in the future. So, for example, if you were to invest in the two-year T-Bills, then you should be able to reinvest the funds after two-years for another three-years and be equally well-off to the investors who invested in the five-year Bills ...assuming that today's expectations prove true, of course.

It really comes down to your own expectations and how those compare with that of the average investor based on which today's current rates are set. If you believe that rates will be higher in the future then others believe, then you should invest in short-term securities. If, on the other hand you feel that others expectations for the future rates are too optimistic, then you should invest in longer-term securities and 'take advantage' of their optimism.  

Analyst Estimates & Accuracy ...separated at birth.

As someone who is currently pursuing the chartered financial analyst (CFA) designation, I'm in awe of how poorly analyst estimates have tracked against actual results over the past few months. If someone were to formally record their performance figures, I wouldn't be surprised to see a standard deviation of as much as 30%. With that sort of accuracy, how valuable is it, really, to listen to analyst estimates in the first place?

Will this affect my CFA plans? No. If anything, I think that analyst performance of late points to greater visibility into what analysts actually do and how reliable their forecasts really are.

What everyone must keep in mind is that analysts are still dependent on a variety of questionable sources of information. Moreover, they ultimately have to make assumptions based on their own interpretations of the information that they were able to obtain. There is no question that they have great access to information; companies eager to maintain or improve their ratings are more than willing to help disseminate their ambitious goals and accomodate analyst inquiries. That said, you have to ask yourself how unbiased the CEO or a company's PR department may be.

For sure, analysts go beyond the company itself as a source for information. They review the industry, speak to suppliers, vendors and even competitors to get as complete a picture as possible. However, with tens of thousands of stocks traded daily, and many analysts tracking multiple companies, how much time can they dedicated to small and medium companies - those making-up the majority of companies?