The Equity Research Shortfall

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Some long-running free financial blogs are also starting to offer premium services. Michelle Leder, a former reporter, started footnoted.org in 2003 to dig into revelations buried in companies' securities filings. This year, Leder added FootnotedPro, a premium service charging $100 a month or $1,000 a year. The Pro service provides rapid updates about disclosures likely to influence stock prices, as well as more in-depth studies based on data from many filings on hot topics. A recent piece searched for hints of impending merger activity hidden in the revised executive compensation agreements of 30 companies.

PICKS AND PANS

Paul Hickey and Justin Walters left Birinyi Associates, the money management and analysis outfit of former Salomon Brothers stock trader Laszlo Birinyi, to found Web-based research firm Bespoke Investment Group in May 2007. Along with a free blog, Hickey and Walters offer a $365 annual premium research service that includes daily reports on key market indicators as well as stock and sector picks and pans.

For example, after a huge runup in the prices of coal industry stocks in the spring of 2008, Bespoke issued a June 19 warning that the sector was poised to fall based on excessively high price-earnings ratios. "It's hard not to shake your head at these charts and realize that someone is going to get burned," the pair wrote. Since then the sector has plunged, with the Van Eck Market Vectors Coal exchange-traded fund off 75% in the past six months, vs. a 30% drop in the Standard & Poor's 500-stock index. Most recently, Bespoke moved its model portfolio to 95% equities from 70% cash on Nov. 20. The S&P 500 is up 21% since.

The granddaddy of premium Web sites remains Morningstar (Morn). The Chicago firm started out providing reports on mutual funds, but since 2005 it has been steadily adding product categories. Currently, for an annual fee of $159, subscribers can read regularly updated reports from 200 analysts on 2,000 stocks and get access to fairly involved screening tools for finding stock or fund bargains. Morningstar bought Web site 10-K Wizard on Dec. 4, adding one of the top automated services for screening securities filings to its investing arsenal.

Once investors find potential stock buys, they may want to bounce ideas off other investors. Sites that charge a fee screen out most of the invective common on free sites. ValueForum.com, which charges $250 a year, does that in part by asking members to rate each other's posts. Many members post only about industries where they used to work. Instead of relying on Wall Street, they seek to profit from the knowledge of peers.

Pressman is a correspondent in BusinessWeek's Boston bureau.