December 28, 2005

Stock Reports

Like most if not all of you, I have money in stocks managed by a couple companies. They seem to do a reasonable job (I haven't lost any money since I've kept any kind of track), but I cannot grasp why they send so much paper to my house. They send bi-weekly reports, quarterly reports with glossy color paper, duplicate envelopes... you name it, they send it. Doesn't that kind of thing cost a lot of money? Heck, I know it does through my printing work. I have opted to receive internet reports from one, but I still get stuff from them on a lesser scale, again on top quality paper.

I have to wonder how much more my stocks could make if they spent their money investing rather than printing. Most of the information I receive is essentially over my head unless I want to do serious research into the operations of these companies, and I imagine most customers don't even open the packaging in the first place. I tend to have a little more faith in corporations than many I know, but this paper investment seems like a frivolous expense and a bad business practice as well. I plan to send some angry email about this in the near future.

Do any of you have the same experience or issues?

Posted by Andy at December 28, 2005 12:29 AM to the General category

I'm guessing that they do it because of some sort of legal reason. Something about being required to divulge company information to shareholders. But that's really just a guess.

Posted by: Keith W. at December 28, 2005 05:47 PM

Oh, I have no doubt that is the case, but those laws could not *possibly* force them to print on the highest quality paper. The differences in paper costs are pretty huge, especially when you get into the numbers of copies these companies must be running.

Posted by: Andy at December 28, 2005 10:05 PM

I understand what you're saying, but these huge companies have some really large shareholders. As in, other multinational corporations. If those investors got monthly reports printed black-and-white on cheap paper, they'd start to question how the company was doing. Why would they be printing cheaply? Are they failing to turn a profit and thus trying to cut costs this way? These are the kinds of questions people would ask. Actually, come to think of it, this might apply to anyone, not just large investors.

So it ends up being a case of the company making the reports look pretty in order to distract the shareholders from any bad news that might lie within. And also to say, "Hey look! We must be doing well; we're not even cutting corners with earnings reports!" It's just funny that, for you, it is doing completely the opposite, and making you worry about why they are spending money on crap. :)

Posted by: Keith W. at December 28, 2005 10:47 PM

I bet you're right, and I have to say that, as a company, that is the stupidest approach possible. If a company is judged solely on the quality of paper it uses in its reporting flood, we have big problems.

Posted by: Andy at December 28, 2005 11:28 PM

I should also point out that the Banknorth, Inc. report I'm holding in my hand is 214 pages in length, not including the introduction or table of contents.

Posted by: Andy at December 29, 2005 06:32 PM

This all makes me glad that I invest in mutual funds rather than individual stocks. :)

Posted by: Keith W. at December 29, 2005 06:37 PM

Hehe, I'm with you there. Mine aren't individual or I'd be sleeping on paperwork.

Posted by: Andy at December 29, 2005 11:45 PM
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