A Business Week article today titled ‘Stock Research: An Uncertain Future’ says “individual investors are rapidly losing sources of analysis and advice, as money set aside for independent research dries up and Wall Street firms slash budgets”.

The article says that “For the average individual investor, getting good information on stocks and other investments has never been easy. It’s about to get more difficult”, and “Fewer analysts are covering fewer companies. This trend of shrinking coverage is expected to continue for two reasons: The financial woes of Wall Street firms and the end of a five-year settlement to fund independent equity research”. Moreover, the article says:

• “top analysts are setting up their own firms (with limited client lists) and moving to hedge funds or other “buy-side” institutions. That means much of the best analysis is going behind closed doors, where it’s harder for individual investors to access”; and,

• the so-called ‘Independent Research Agreement’ which evolved five years ago when ten major Wall Street firms agreed to provide customers with independent research to settle claims that their in-house research was biased – which agreement set aside about $90 million per year for independent research – ends in July.

The article reports one commentator as saying “Research got to the point where it was a mile wide and an inch deep. “Now, with layoffs, it’s going to be an inch wide and an inch deep”. A second commentator is quoted as saying “Overall, spending on research is declining”. So, questions the article “Where, in the future, will these investing gems come from? And will individuals be able to afford them?”, and says “Online brokerages TD Ameritrade (AMTD) and Charles Schwab (SCHW) both say they will continue to offer both qualitative and quantitative research”. The article also quotes one commentator as saying “Wall Street is just not structured for individual investors”, and that “On Wall Street, money talks. And those who can pay, whether they be big institutions or the very wealthy, will be first in line for the very best information and research”.

One obvious result of all of this is that serious individual investors may turn increasingly to the Internet to find well structured, educational (and perhaps industry focused) websites where they can do more of their own economic, industry and company research. One such site is StockResearchPortal.com, which focuses on all these things in the context of Mining and Oil & Gas Companies. It will not surprise me if StockResearchPortal.com is a portend of things to come in the context of investor education and investor driven research.

Click here for Research on Base Metal Mining Companies.

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