Investors Sometimes Overlook What's in Plain Sight
It can pay to read 10-Ks carefully.
"Read the 10-Ks," they say.
Photographer: STAN HONDA/AFPThis post originally appeared in Money Stuff.
There is a trope in financial markets about virtuous stock investors who show up every day and plow through a stack of annual reports on Form 10-K, learning all they can about the companies so they can make informed investment decisions. This trope annoys me a little, given my efficient-market sympathies. If something is in the 10-K, that means it is (1) backwards-looking and (2) public. Markets are forward-looking. The way to beat the market is to have information and analysis that no one else has. The point of the market is to add information to prices. It is nice that everyone has access to the same basic shared set of information in the 10-K, but don’t pat yourself on the back too hard just for reading it, you know?