Hardworking Hedge Funds Might Have the Upper Hand
Do your homework.
This post originally appeared in Money Stuff.
Public companies in the U.S. have to make public filings -- annual and quarterly reports on Form 10-K and 10-Q, announcements of material events on Form 8-K, descriptions of trading by insiders and big shareholders, etc. -- on the Securities and Exchange Commission's Edgar website. Should you read them? For amateur investors that is perhaps a difficult question: There is an obvious conventional wisdom that you should read them so you can be informed about the companies you invest in, but there is also an argument that reading SEC filings gives casual retail investors merely the illusion of competence. After all these filings are publicly available and you are competing with professionals whose only job it is to analyze stocks; surely those professionals are also reading the filings and then also doing a lot of other research that you just can't do.