Andrew Allentuck

Monday, May 19, 2003

Standard & Poor's Stock and Bond Guide
2003 edition
McGraw-Hill, 2003
463 pages
ISBN 0-07-141065.1

The information in this compendium of stock and bond, variable annuity, closed-end fund, mutual fund and bond tally is a treasure of insight. With data current to the end of 2002, it's as up to date as an annual publication can be. More recent data is available on the Web.

One can find the bonds of Enron Corp. with D ratings, meaning in default, which is right. But there are startling omissions. The closed-end fund listings are sparse. Mutual funds listed are deceptively thin. For example, in the mutual fund ratings, one can find only a few listings for Fidelity funds, just one for the numerous funds operated by midwestern megabank Bank One and just nine of the more mundane funds of T. Rowe Price of Baltimore which actually runs some rather exotic funds in communications and entertainment. The introductory material in the guide indicates that there are listing on just 600 of the 12,000 or so mutual funds sold in the U.S. But the standards of inclusion are bizarre. There is no indication of the awful performance of some of the Franklin Templeton global investment funds Funds operated by PIMCO, a brilliant, California-based bond shop headed by the legendary Bill Gross, include no bond portfolios. PIMCO's stock funds turn out to be pretty crummy, but buying a PIMCO equity fund and then finding it wanting is like walking out of an automobile showroom with a limousine and then criticizing it for being hard to park and lousy on fast corners.

Canadian stocks are listed along with international ADRs traded in the U.S. There is valuable data on convertible bonds that helps to set value and conversion targets for these complex instruments. In short, this guide is a flawed masterpiece, great on stocks, indicative though hardly encyclopedic on mutual funds, thin on closed-end and mutual funds, great on bonds, useful but thin on variable annuities, helpful on convertible bonds, and entirely vacant on the great question of 2003 - who can you trust?

Next year, S&P should supplement its listings with a who's who among companies with CEOs who took the fifth amendment in Congressional hearings on corporate dishonesty and various scandals, penalties paid by public auditors who never admit guilt about anything, and companies with CEOs who pig out at the expense of shareholders.