Inside Information? Yes, inside information about companies is available, but it’s not what you might think. There may well have been a time when company officials provided hints or even specific comments to analysts or insiders looking to get a leg up on the general public, but those days are long gone. These days, given the risks associated with doing so, companies have usually gone out of their way to release new information to the public as quickly as possible. Analysts typically seek information about current developments and what lies ahead. The latter is forward-looking and is known as guidance. In most cases, when companies are releasing their quarterly results, they include guidance about the near future. This guidance covers revenues and profits, usually in ranges, e.g., $200-220 million in revenues or $2.00-2.20 a share in earnings. There may also be interim updates when management expects that the numbers will be higher or lower than those previously released.
The Professional Approach To Stock Selection There are various approaches to stock selection, but the two that predominate are fundamental analysis and technical analysis. Fundamental analysis is a numbers-based method that evaluates key factors such as income and financial health, including the past, present, and future. Technical analysis emphasizes movements and formations of stock prices. Fundamental analysis is based on factors that over time have proved to have a meaningful impact on stock price movements. The optimal picture of corporate profitability is steady growth, both in the past and, prospectively, in the coming years. Steady growth is rewarded by higher valuations of underlying earning power than those accorded companies with erratic progress. When professionals screen (filter) the data of the broad universe of stocks, they look for companies that move ahead every year, regardless of the prevailing economic conditions. Although high past growth is no guarantee