SEC's advice to investors: Do your homework first

Associated Press

The Securities and Exchange Commission is advising investors not to rely solely on financial analysts' stock recommendations and to consult other sources of information before investing. The SEC urges that you:

• Examine a company's financial reports using the SEC's Edgar database at www.sec.gov/edgar, or call the company to ask for copies. If you can't analyze them on your own, ask a trusted financial professional for help.

• Find out whether the analyst's brokerage firm financed a company's recent stock offerings, especially initial public offerings, or IPOs.

• Learn as much as you can about a company by reading independent news reports, commercial databases and reference books. Your local library may have these and other resources.

• Talk to your broker or financial adviser and ask questions about a company and its prospects. Remember, however, that if your broker's firm issued a positive recommendation on the company, your broker would be unlikely to contradict it. Be sure to ask your broker whether a particular investment is suitable for you in light of your financial situation.

• Remember that even the soundest recommendation from the most trustworthy analyst may not be a good choice for you in light of your financial goals, timetables and tolerance for risk.