Understanding Company News: How to interpret stock market announcements

espected financial journalist Rodney Hobson is back with his third book focussed on explaining the workings of the stock market and how to profit from it. Following his first two offerings, Shares Made Simple and Small Companies, Big Profits, his latest tome is packed with detailed, but easy to understand information, targeted at the private investor. But this time the focus is on, as the title suggests, how to understand the sometimes complicated and confusing announcements which companies put out to shareholders and the markets.

The book is divided into three sections. Section A concentrates on the specific stock exchange and European Union rules quoted companies are forced to follow and how they go about meeting their requirements. This could have been a boring list of rules and regulations but Hobson livens up the text by giving specific examples of how companies report information ? and sometimes how they are punished when they break the rules. The end of the section includes a list of some of the best sources of news announcements. I say some of the best as ShareCrazy.com, the one stop shop for financial data, news and opinion, is not on the list. Shame on you Rodney.

Onto Section B and Hobson goes into more detail about how to understand specific statements that all companies are forced to release on a regular basis: trading statements, annual results, agm statements and the like. This is perhaps the most useful section as in it Hobson explains how to understand stock market jargon and crucially, teaches readers how not take announcements at face value ? finding the underlying news behind the public relations spin. After reading this investors will never again be fooled by a company which gives a raft of positive bullet points at the top of an annual report, only to insert a cleverly worded profit warning on page 94.

Finally, Section C takes a look at other important announcements which companies release from time to time: profits warnings, director dealings, rights issues, share placings, takeover approaches and such. Importantly, it explains how these various events might affect the share price and why.

Like his previous efforts, Understanding Company News is another excellent book from Hobson. . While investors who are relatively new to the stock market will benefit from the book the most, those of us with a little more experience are sure to learn something new as well. Both groups will find it interesting enough to read in one sitting it and highly useful as a reference guide.