The column is ending its run because I've decided to begin what I (buoyantly) hope will prove a stimulating early retirement. Naturally, when I'm not pursuing some of the healthful, relaxing, and fun things I haven't managed to squeeze in often enough, I plan to spend just the right amount of time managing my personal portfolio. I am little different from so many other baby boomers, who never dreamed that they would wind up responsible for six- or seven-figure investment accounts. Yet now that we find ourselves in just that fortunate spot, the only true move is to approach the task as intelligently as we can. With that in mind, the first Barker Portfolio was headlined, "A Battle Plan for Accidental Investors."
It also came with this alert: "Our best defense is to remember that Wall Street abounds with ultrasmart salespeople who are devoted to capturing our money." In this last column, I want to suggest what I see as the best offense. That would be you.A FEW WEEKS AGO, my dad asked me a startlingly simple question: What's your best source of investment ideas? After a minute, I realized it wasn't any of the scores of pros whose names, numbers, and e-mail addresses appear on my list of contacts. Yes, many of them have been uncommonly generous in sharing their time and thinking with me. Yet I told my dad: "Public documents few people bother to study" -- public companies' news reports and financial statements (8-Ks, 10-Qs, 10-Ks), quarterly updates of investment firms' holdings (13Fs), and details of corporate insiders' securities trades (Form 4s).
All are usually available at a company's Web site and, if not, at the Securities & Exchange Commission's site, through its EDGAR service. Especially fruitful for me have been the 13Fs, which I have searched regularly for new or expanded positions held by investment managers I admire, among them Ariel Capital Management, Dodge & Cox, Harris Associates, Southeastern Asset Management, Primecap Management, and T. Rowe Price. (TROW
) In other words, there is no secret source. If there is any secret, it's only to check diligently, and coolly assess, public information.
The companion to this plain truth is a stark injunction leveled at me in 1984, when I began covering the Street. Fixing me with his big, dead eyes, my new boss said: "Trust no one." In that first instance, he meant brokers, stock analysts, and institutional investors, any of whom could be expected to exploit at our expense information they might glean from me. But I soon saw that he also meant I shouldn't trust other people's judgment -- that of colleagues, friends, pretty much anyone's. As shown in Reminiscences of a Stock Operator, the 1923 tale of investment legend Jesse Livermore, even plugged-in advisers with your best interests in mind will lead you astray. After losing big by trading Union Pacific (UNP
) solely on the advice of a well-connected Wall Streeter, the stock operator finds enlightenment: "It was not that all I needed to learn was not to take tips but follow my own inclination. It was that I gained confidence in myself." If you want to trade stocks, base decisions on your own homework.
I hope you have not been forced to learn this lesson the hard way. Even if you haven't, I offer this last, modest suggestion: Before signing on the dotted line for your next brokerage account, take a few minutes to read at least the introduction and epilogue to a book due to reach bookstores in April, Wall Street Versus America (Portfolio, $24.95), by former BusinessWeek writer Gary Weiss. You will see just how alone you truly are.
Finally, I want to thank all of the readers who have written, faxed, and phoned since 1999. I am especially grateful to the many who didn't see things my way yet took the trouble to explain (in a civil manner) why. This column is now done. What won't change is your demand for BusinessWeek's signature brand of open-minded investment analysis -- one that holds no person, viewpoint, or institution sacred. By Robert Barker