NIBM - Investing Help

Investing Help

The Big Lie of the late 1990's was that investing was easy. It isn't, but that does not mean it is impossible to learn. This section is dedicated to helping investors of all experience levels learn something new about the craft of investing. Our goal is often helping readers to lose less money, not necessarily provide lessons on how to make more money. Why? The one common denominator of all great investors and traders -- aside from going broke at least once in their careers -- is they didn't become great without knowing how to limit their losses. If readers can learn that one thing, we'll be happy.

Long Term Investing Worksheet

Thousands have downloaded it since it was first created in 1999. It's a simple two-page worksheet designed to be filled out before you take an initial position in a stock. It serves as a guide to organize the reasons behind why you want to make the investment in the first place. Designed to be collected and placed in a notebook, it will help you keep a record of all your successes and, more importantly, your failures.

The file is in the Adobe Acrobat PDF format. Your browser probably is already configured to display PDF files so give it a click. If you have problems, try downloading the latest Acrobat viewer. It's completely free from Adobe. You can access the Acrobat Reader by clicking here.

Tax Talk: Navigating the IRS Wash Sale Rule

This series has consistently been one of our most popular educational items. The Wash Sale Rule is complex and affects even people who consider themselves long term traders. If you dabble in options or ETFs (Holders, iShares, etc.) it gets even more complicated.

We recruited Bret A. Espey, CPA, of Espey Accounting Services to help our Biotech Monthly readers navigate this complex subject. In a series of three articles, he does a fabulous job explaining the Wash Sale Rule in a way anyone can understand -- no tax law or accounting degree required! We recommend reading each article in order as they build upon each other.

Tax Talk 4: Capital Gains

The changes in capital gains (including dividends) tax rules for the 2003 tax year have confused many people. This article, the fourth in our highly popular "Tax Talk" series, helps investors navigate the new rules. We recruited Bret A. Espey, CPA, of Espey Accounting Services to help our Biotech Monthly readers navigate this complex subject.

Is the annual Russell index rebalance a sell signal?

As biotech researchers, we often get very wrapped up in the future. Given the market is theoretically looking several months ahead, focusing on the future is not always a bad thing. For biotech investing in particular, the farther down the road you can gaze, the more profitable you can become.

But biotech -- especially small-cap biotech -- does not trade in a vacuum. It is subject to macro market influences. When one is trying to assess the macro market, looking back is sometimes the only way to get a handle on the future.

In July of 2001 and May of 2002, members of the NIBM Research Team authored articles about how the Russell rebalance affects the Russell 2000 Small Cap Index. Investors in small cap stocks or mutual funds indexed to the Russell 2000 would do well to read these articles.

Clicking on the red box takes you to a page where you can access either article.

Five rules for analysts to follow if they want credibility

The first thing to understand about any investment research you read is there are biases. Principled researchers go out of their way to disclose their biases as clearly as they can. Lazy researchers leave disclosures to blanket statements. Dishonest researchers leave out the disclosures or make them so vague the reader can't tell if they have any vested interest in the subject company.

Lawyers and Congress got involved in this recently. Several lawsuits have been filed against investment bank researchers accusing them of biasing their research to make it easier to get investment banking business. Congress took up the subject, holding fascinating hearings where they called the investment bank analyst community on the carpet -- and rightfully so if preliminary research into the subject by the SEC is any indication.

This article was originally written for the Internet Financial Connection column on the Silicon Investor web site. It really struck a nerve as we received many responses praising the five rules we lay out in the article. We've followed the five rules our entire analyst careers and would love to see more of our colleagues follow our lead. It would certainly restore some much needed credibility to our profession.

Until then, pay at least as much attention to the disclosures as you do to the content of the research. Patronize those analysts who follow the five rules and tell your friends. Let market forces help reform the analyst community.