Volume 25, No. 3: “Let’s Get Ready to … Reeead!” A Guide to What Matters in the 2015 10-Ks
There’s a twilight zone in late February and early March, neither winter nor spring. It’s 10-K and annual report season – the time of year when investors put aside working on their personal tax returns (a completely different season) and face the barrage of financial statements heading their way.
That is, they’ll face the barrage if they actually care – and many investors care more about acting upon the advice of others who have already digested the information for them. You can’t be a truly independent investor if you aren’t absorbing and interpreting the financial information on your own. So much for independent thinking on Wall Street; maybe that’s a contributing reason why a “herd mentality” rules market action so often. The truth is that 10-K information is too good to pass up if you actually have made a significant investment in a company, whether it be coined in credit or equity. It’s not a chore: reading the 10-K should be a quest for knowledge that teaches an investor something new, something that changes or reinforces a view held about a company and its management. Ignoring free corporate information is to assume the ostrich stance: sticking your head in the ground. Ostriches are not famed for their intelligence – but they are noted for their meat.
Don’t be an ostrich – read the 10-K! Be an independent thinker. The U.S. financial statement package could always be improved, but in its current incarnation, the annual information package is plenty of meat for investors to digest. Or it’s plenty of tofu, for those investors who pass on meat. It’s all food for thought, no matter what you like. This report describes some new information for investors to consider as they research the new 10-Ks, and reviews some analyses that are possible only when the 10-Ks arrive.