I run into a bunch of data as I'm reading about investments. For instance, the newest issue of one financial magazine I read regularly arrived the other day. Each issue features a page of usually interesting statistics near the end of the magazine. These include:
- The most widely held stocks -- such as ExxonMobil, General Electric, and AT&T
- Recent and long-term returns for various indexes, such as the S&P 500, the Russell 2000 (which focuses on the small-cap universe), and the Morgan Stanley EAFE (which reflects markets in Europe, Australasia, and the Far East).
- The highest-yielding Dow stocks, which included Bank of America
(NYSE:BAC), Pfizer (NYSE:PFE), and DuPont (NYSE:DD).
As I read through the statistics, though, I worried that some people might think that the highest-yielding Dow stocks are all good investments -- because they're Dow stocks and sport high yields. They might not realize that Dow companies can run into trouble and be replaced. Eastman Kodak, AIG, and Goodyear Tire
Also, steep dividend yields are often a byproduct of stock prices that have imploded for good reason. Bank of America, for example, faces considerable uncertainty as a major financial services enterprise in today's economic environment. Many of its peers have reduced or eliminated their dividends.
A top stock?
Here's another worry -- the page lists 10 "top-performing stocks," with returns for the last month and the last year. Yikes! Even a one-year performance offers little to draw any conclusions from. Lots of below-average stocks have good years, and lots of great stocks have so-so or crummy years. And why anyone would bother to list top performers over a one-month period is beyond me.
I hope no one thinks the list features rockets that will keep on rewarding investors. One company on it, RadioShack
So as you face financial fare, be a critical reader -- and look beyond the first statistics an article gives you.
Longtime Fool contributor Selena Maranjian owns shares of General Electric. Pfizer and Kraft Foods are current Motley Fool Income Investor selections, while Bank of America is a former one. Pfizer is a Motley Fool Inside Value pick. The Fool owns shares of Pfizer. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.
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