Leveling the Playing Field
Charles B. Carlson, CFA
Contributing Editor, Dow Theory Forecasts
Don't look now, but the individual investor just received yet another boost in his/her quest to level the playing field with professional investors.
The SEC recently said that selective disclosure of pertinent company information is now a no-no. That is, companies are obliged to release information to the general public and not to just a few investment professionals.
No more "favored nation" status for brokers and analysts, if you catch my drift.
Not surprisingly, many brokerage firms and mutual funds were opposed to the rule. After all, that avenue to special information gave them an edge in the markets.
That selective disclosure is no longer allowed is potentially a big deal for small investors, but don't expect too much to happen over night. Indeed, my guess is that, initially, companies will be a bit less forthcoming on news to all investors until they get a better read on the SEC's plan.
Over time, however, the rule should help individual investors gain quick access to the type of news that they only read about after the news was broken to the pros.
One thing is for sure - the Internet will be at the forefront of this new age of disclosure. Indeed, you will see more analysts' conferences and company announcements made available to everyone on the company's Web site.
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