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Subject: Full Disclosure

‘Full disclosure’ is a policy adopted by security market regulators that requires issuers of securities to disclose to investors all material information relative to the instruments offered into the market. Material information is usually considered to be information that could influence the price of securities on the market.

Post Modern Security Analysis

Operational versus financial information

Operations: the How and Why of markets ...

The Crash of 2008 suggests that understanding the operational details of capital markets can be as important as traditional Graham & Dodd security analysis.

This article, Part Nine in the series on Post Modern Security Analysis, discusses Capital Market Taxonomy as applied to market operations and the use of a semantic wiki in collaborative research.

Post Modern Security Analysis

Managing complexity

At one time, securities were relatively simple ...

Modern capital markets have become so complex that security analysis methods of the 1930s are no longer adequate.

Excessive, daunting complexity is the reason that security analysts must move now beyond Graham & Dodd.

Complexity is not only in financial information, but in collateral issues such as institutional operations, the interaction of foreign and domestic taxation, and structural risks.

Investor protection:

US SEC lets issuers play “Where’s Wally?”

The fine art of hiding in plain sight

The US SEC allows issuers to hide required disclosure by perceptual tricks that remind one of the children’s series, “Where’s Wally?”

These methods include burying warnings in a list of unlikely risks, incorporating facts ‘by reference’, loading documents with irrelevancies, and playing the ‘each fact in the proper document’ game.

Capital Market Taxonomy provides ready-to-use check-lists that help analysts cut through dense disclosure documents.

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Featured articles on inside pages

Stock buybacks

Stock buybacks, refusing to die, live on

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation and bond issues. More ...

Securities Analysis

Some banks are too complex to manage

It is no secret that Citicorp no longer earns the same respect in financial circles as in days of yore. The problem is excessive complexity. This article describes the simplicity of the Citibank operation in 1956 when the bank was the world's most powerful financial institution.
More ...

US Politics

President Obama and the Lincoln Bible

The Crash of 2008 put Barack Obama in the Oval Office and was the culmination of two secular financial trends. Americans now have an untested, inexperienced leader, with strange radical friends and a leftist deficit spending agenda. More ...

US equities

Stocks surge on spurious earnings

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation reserves and bond issues. More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2011-11-04 13:36