But with a little homework and diversification, investors can stay on solid ground. Ted Davis, senior vice president and senior portfolio manager of Frost Financial Management, recommends a lot of reading, starting with periodicals that run tallies on the best-managed companies. A company's management team deserves close attention, analysts said, something that is easier when one invests in local companies. For instance, San Antonio investors can get an idea of the business sense of Lowry Mays, co-founder of the aggressively acquisitive Clear Channel Communications, or they can keep up with news reports on Edward Whitacre Jr., SBC Communications chairman and chief executive. Investors should also check on how much stock the management owns.
Analysts see executive ownership as a sign of faith in a company.
Some sources on the Internet provide good information for investors, but securities regulators warn that investors should steer clear of unscrupulous promoters who can hide behind the anonymity of the Web. It also helps to keep an eye on who is buying stock in a company. When institutional investors, such as mutual funds, pension funds and asset managers, invest in a company, the move comes after serious research. Financial publications often run blurbs about institutional investors buying a particular stock and some provide ownership profiles of particular stocks. Many companies are using the stock market's fluctuations to buy back their own stock, a move that could benefit investors as well.