Wednesday, January 4, 2012

Standard & Poor’s 500 Guide, 2012 Edition

It’s commonplace for authors to write revised editions of their books. But book reviewers are not supposed to serve up revised editions of their reviews. The former are billed as new and improved; the latter seem nothing more than warmed-up fare. The problem is that sometimes it’s difficult to start from scratch when reviewing a book that, while completely new, is also identical in structure. Such is the case with the 2012 edition of the Standard & Poor’s 500 Guide. So, with apologies, herewith a revised edition of last year’s review.

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This is a very big paperback—8 ½” x 11”, more than 1000 pages, and weighing in at about 4.5 lbs. With so much information available online, why would anyone need this book? I can think of several compelling reasons.

First, a personal preference: I enjoy flipping through pages, making serendipitous discoveries. I don’t have the same kind of experience online since I normally am looking for something specific, not just seeing what comes my way.

Second, the two pages devoted to each company in the S&P 500 are jam-packed with data, including ten years of company financials (per share data, income statement analysis, and balance sheet and other financial data), five years of revenue and earnings per share, and the four most recent dividend payments. The summary of the company’s business is also more analytical than the run-of-the-mill online fare.

Third, and taking up almost half of the space allocated to each company, is proprietary S&P information, ranging from analysts’ reports to the famous five-star system of investment recommendations. I complained last year that the analysts’ reports were not especially timely; some dated back to July and the most recent were from October. This year’s edition has remedied that problem. Most analyses and business summaries were written in November; closing prices for stocks are from late November.

Other data include S&P’s qualitative risk assessment, its quantitative evaluation, and each company’s relative strength rank. For each stock there is also a price chart from June 2008 through November 2011 overlaid with S&P proprietary metrics.

For the reader who cannot live without stock screens, the book provides lists of companies with five consecutive years of earnings increases, stocks with A+ rankings, rapid growth stocks, and fast-rising dividends.

The book is somewhat unwieldy to handle (it’s definitely best read on a desk, which I personally find awkward), but this is a small price to pay for the amount of information available. It will find a place on my shelf next to last year’s edition.

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