Investment Research: Ignore the Ratings, Read the Reports

Independent research takes many forms. Here are a few primary examples:

• Web sites: Financial sites that provide commentary and expert advice from buy side market professionals and financial journalists. (While I may be biased, I have to say that TheStreet.com ranks at the top of the list of Web-based independent research and analysis.)
• Independent analysts: Individuals and full firms that provide research similar to that of sell-side analysts, but with the bundled service of brokerage execution and custody. Some independent analysts may charge a fee while others offer their research for free.

  As is the case with many things in life, you get what you pay for. The best and most actionable research tends to be for a fee. That is not to say that free research is not valuable. It is. Also, there are some fee-based services that are not worth a penny, in my opinion. Buyer beware: I suggest to get a no-obligation free trial before you sign up to pay for any service.

• Market data and information services: These can be quite costly and are typically used by professional money managers or high net worth individuals. These services vary by form and function, but as points of reference, a few services that I use are Bloomberg and Thomson Financial.

So, sell side or independent research?

The answer is really up to you. However, here is a set of criteria to help you make your decision:

• Quality: How well has the source of the research performed? Look at the track record or reputation of the analyst or service.
• Cost: At the end of the trading day, is the source "worth it"? Do an old-fashioned cost-benefit analysis.
• Convenience: Can you digitally download the data or use the research to test your own investment theories and trading strategies? You want the research to be made available to you in the most expedient and efficient manner possible. Accessibility, flexibility and speed are paramount.