Andrew Allentuck

Monday, February 25, 2002

Standard & Poor's 500 Guide, 2002 edition
McGraw-Hill Ryerson, 2002
ISBN 0-071-38071-X

This is the indispensable bible of US large cap stock investing, revised for 2002, with stock reports, S&P evaluations, outlooks for companies, fair value assessments, technical evaluations, relative strength ranks, market caps, insider holdings and trades, and stocks rated by quality, rapid growth, historic and rising dividends.

How good is the book depends in part on the hindsight that time provides. On Enron Corp., for example, there is little warning that it would go bankrupt. Yet there are hints. "Enron is leveraging its experience in gas and electricity marketing...." says S&P, which is an understatement if ever there were one. "The stock has declined almost 60% since the beginning of the year (2001), mainly reflecting regulatory and political uncertainties as well as the recent departure of CEO Jeff Skilling" So far, so good. Then comes the clunker - "Enron's intrinsic value is estimated to be between $49 and $56 per share, which makes the stock attractive." Could investors have expected what did happen? S&P doesn't let on. But when the guide was written, S&P presented what was known. Blame the messenger? We'll leave that to the reader.

In spite of the lack of foresight about Enron and, for that matter, other firms such as Tyco International Ltd., a conglomerate in hot water for its style of accounting, the Guide remains an essential reference for libraries and for investors. Given the speed of change on markets and in the fortunes of major firms, asking for more would be too much. Apart from a Reuter's or Bloomberg quote terminal or internet stock services, this is the best single reference work on US big companies. No one active in US stocks should be without it.