Understanding Investment Research: Types, Sources, and Reliability

Investment research provides valuable insights but requires careful evaluation of sources and potential biases.

### Understanding Investment Research: Types, Sources, and Best Practices
* 📊 Most investors rely on analysis conducted by others, known as **investment research**, which informs them about various investments.
* 🔍 Investment research can be broadly categorized into **commercial research**, typically produced by investment banks, and **academic research**, which is peer-reviewed and conducted by university scholars.
* 📈 Commercial research includes single stock notes, economic research, and sector-specific analyses, while academic research often covers **long-term returns** and **broader economic trends**.
* 💡 Free resources for retail investors include research published by central banks and institutions like the **International Monetary Fund**, providing **valuable insights into the economy and financial markets**.
* 🎥 Many people now turn to platforms like YouTube and TikTok for research, but it's essential to **verify the credibility of the sources** and the **background of the individuals** providing this information.
* 🛡 While research can be a powerful tool for informed investing, it's crucial to remain **skeptical and consider the potential biases and incentives** behind the published information.
* 📊 As highlighted by the S&P Dow Jones indices, institutional research can reveal trends, such as the **performance of active funds compared to passive benchmarks**, which can **significantly influence investment strategies**.
* 💼 Ultimately, leveraging quality research while conducting personal due diligence can **enhance your investment decisions** and help you **achieve your financial goals**.

most of us invest based on analysis done by other people. This is investment research. In this video, we'll look at the types of investment research, how to use it, gauge whether it's reliable, and look at which sources of research are most likely to help us achieve our financial goals. Today's video is sponsored by Saxo, an award-winning UK investment platform. So, what is investment research? Here, I've used a very broad definition deliberately, as we'll see later, but really, it's just publications that inform you about investments. Now, this is what you typically think of as investment research. This is published by a UK company called Peel Hunt, and you can see that it's about a single stock, in this case, a house developer, and the name of the developer is Barrett Developments. Now, notice the really large number here, which is the TP, the target price for the stock is 490. So, if it's trading below that, you'd probably think, Oh, okay, it should go up in price. Also, there's a one-word definition which tells you whether to buy the stock, hold the stock, or sell the

stock so a very simple summary of what is actually a quite complicated analysis of the stock. So, if you read the whole note, it'll have things like valuations, descriptions of the environment for this industry, and where this stock fits within it. Now, I used to write these research notes when I worked for an investment bank, and it's not that dissimilar from making YouTube videos in the sense that you're continually creating content for an audience, which in this case is mostly fund managers. So, that could be pension fund managers, insurance companies, sovereign wealth funds, or it could be hedge funds, anyone who manages stocks in this case because it's a single stock research note. Another type of research is academic research, and there's also academic research on investments, such as this great paper, which I love, which talks about returns over a very long period of time. It's the rate of return on everything from 1870 to 2015. Now, the big difference between academic research is firstly who writes it. So, this is written by academics working at universities. The

second difference is that academic research is peer-reviewed. Peers just mean the people who work in the same field as the researcher. They might be friends of theirs, they might not, they might be enemies, but the really important point here is that there's a level of filtering so that if they make false statements or misleading statements in the research note, then it'll get corrected in the draft stage before it's published. Contrast that with a research note published by an investment bank where you just click on send, it goes to the compliance department, they proofread it, make some changes, there's some back and forth, and then it's published. There's no peer review in that case. So, there is this additional layer of filtering for academic research, which you don't get for commercial research from investment banks. So, we've seen the broad categories of commercial research on investment and academic research. Now, let's dig into the subcategories for investment research. Now, the research note we first saw from Peel Hunt, that's a single stock research note, and that's written by a

stock analyst who usually specializes in just one sector, so it might be house builders, telecoms, tech, and they live and breathe that industry. Another type of research which investment banks also produce is economic research, so they have a team of economists, and it's their job to produce the macro top-down information which feeds into the investment process. So, for example, they'll talk about what the central bank's doing, they'll talk about inflation, GDP growth, all of which affects your investments. Then, if we drill down into the asset types, there'll usually be an interest rate research department, sometimes it's called fixed income research, and these analysts specialize in things like government bonds, but also things like credit, so corporate bonds, where they'll talk about single issuers and their credit quality and which trades are interesting at a given point in time. Rate strategists will also have a view on whether rates are going up or down and monetary policy from the central banks. Then, we turn to foreign exchange, and the standard joke is that investment banks' foreign exchange analysts are there to make the

equity analysts look good because their forecasts are even more difficult to make. At least with equities, they tend to drift upwards, whereas foreign exchange doesn't, and so it's much harder to make reasonable forecasts over the short or medium term. But they have a go, and they'll usually talk about the major currency pairs, things like Sterling, the dollar, the Yen, the Euro. But you also do have Emerging Market currency strategists who specialize in just those markets. And then finally, you've got commodity strategists, often from Australia, given its importance in the commodity space. But they have an opinion about things like gold or perhaps copper, Industrial Metals, or it could even be things like wheat or agricultural products. But it's not just investment banks which write that kind of research. As someone who's a retail investor like you and I, there's lots of free information available in terms of research from central banks. So if you read the minutes of one of the FED meetings, for example, there's often an analysis of the US economy, the global

economy financial markets made by the team of economists who work at the FED. There's a similar thing from the Bank of England in its monetary policy reports. Also, there are institutions like the International Monetary Fund, which publishes outlooks which look at the global economy. It makes forecasts about what the GDP growth rates will be for each of the countries around the world, and it also advises on what those countries should be doing. So, it's not just investment banks that publish research; it's also these institutions which publish free research, which are great resources if you want to keep informed about what's going on. Now, my original definition of research was very broad because a lot of people get their research from YouTube, and I'd argue that some of the research which is published on YouTube, on TikTok, is as high quality as the research which is published by investment banks. All I'd say is look at the background of the person who's giving the views. For example, Kyler Scanland, who you can see here beside me, came up with the idea of a Vibe session.

which is an interesting idea, which is that even though the US hard data didn't show any kind of signs of a recession in 2024. If you ask people how they felt about the economy, the vibes were that things were not good. So, she created a word which actually entered the English dictionary. But I'd argue that a lot of people nowadays use things like TikTok and YouTube much more than they would say the research at an investment bank, particularly retail investors, people who don't work for an institution, who are just investing off their own bat for their own pension or their own savings. So, all I'd say is if you are going to use TikTok or YouTube or other social media to inform you about investing, just look into the background of the person who's giving the information. Are they educated in the field in which they're talking about? If not, should you really pay much attention to what they say? Or is it just opinion? Is it conspiracy theories? And is it doom porn? Are they always saying the same thing that markets are going to crash? If so,

you should take it with a pinch of salt and maybe consider another source. Today's video is sponsored by Saxo, an award-winning UK investment platform. Where do you do your research before deciding which stock, ETF, or fund you should buy? I like to use data and research, as you know, to make my investment decisions, and one platform that provides professional-quality research is the recently launched Saxo Investor from Saxo. What I like about the platform is that they have a team of experts, not just content writers, who write daily analysis about what's going on in financial markets and how they impact your investments. So, whether you're looking for some inspiration, trying to diversify your portfolio, or manage your risk better, they have smart, actionable content for everybody. One cool feature that they have is the screener functionality that lets you filter hundreds, if not thousands, of stocks, ETFs, funds, and bonds based on all sorts of things like sectors, ESG risk rating, annual returns, and much more. So, you can make really informed decisions about your investments. But one of the standout features of this

new platform are their investment theme baskets. These are curated lists of stocks and ETFs that focus on the hottest market long-term trends like AI, semiconductors, and even the upcoming US election. So, whether you're a beginner or a seasoned pro at investing and you want to take your investing to the next level, check out Saxo's new platform. And to help you get started as a view of Pension Craft, you get a special time-limited offer from Saxo to invest in 100 popular US stocks commission-free when you open an account with them using the link below. Terms and conditions apply. To learn more, just go to that link in the description. So, why is research useful in the first place? I think the primary use of research is that it's written by people who are obsessed with a given field and know almost everything about it. So, if you want to be informed about everything, well, why not use specialists in each field to keep you informed? For example, when I first read about the commodity super cycle, it was based on

investment research which was published by an investment bank, and I made a trade on the back of it, which was very profitable. Now, I wouldn't have been aware of it, and I wouldn't have discussed it on YouTube, and I certainly wouldn't have traded it unless I'd have read that research in the first place. So, if you do want to keep informed of trends in equity, in foreign exchange, in macroeconomics, then research is a great way to keep on top of things. That would also apply to things like macroeconomics and big shifts that we're seeing currently, for example, in monetary policy. We're going, for example, from a world in which rates are very restrictive, very high, to one in which they're not so restrictive. And the question is, what influence is that going to have on markets? So, by reading research, you can inform yourself about the change, but also what impact it's likely to have. Another point is that these institutions typically have huge resources, many staff to actually do the analysis, and each of those staff members will have their own

specialty, for example, one of the things which I'm always quoting is the S&P index versus active report. This is created by S&P Dow Jones indices. You can see the infographic about it here, but what this report does would just be impossible for me to do. It tracks active funds around the world, thousands of them based in each country, and it looks to see what proportion of them are beaten by their index. So, for example, if we look at the US, you can see here that 79% of US active funds were beaten by their passive benchmark, which is the S&P 500, and that's over a 5-year period. Now, there's no way I could do this kind of analysis with this kind of breadth, and when I first learned about this after I left the investment banking world, it completely transformed the way I saw investing, and I've been sharing that message ever since. So, by using this institutional research, you can inform yourself and use those resources to your benefit. Now, let's consider the risks.

that go with using research, and I'll start off with a quote in Russian, which I'm going to mispronounce. I'm sorry for people who do speak Russian. Верь, но проверяй (Vdi no prev vdi), which means trust but verify. It's absolutely fine to use research, but it's always good to use it as the starting point for your own investigations. Always kick the tires, think to yourself, can this be true? and then try and back up some of the facts. Often, what is published as research is simply marketing, a way for, say, a YouTube channel or a TikTok channel to get clicks. That's good for them, but it's not necessarily good for you. So, it's always worthwhile knowing what the publishers' incentives are for publishing their research. In the case of investment bank research, it's often a commercial interest. There's prestige if they have good analysts and they get on TV to talk about their research, certainly, but there can also be a commercial benefit in that the company that you talk about will do business with your investment bank or

Perhaps the research will make your counterparty trade with you more often, in which case that could also benefit you because that flow comes your way and it makes you some money. So always use those incentives to see if what's being published is going to benefit you or just the publisher of the information. But I'd reiterate again, you should always do your own research. If it's ringing alarm bells in any way whatsoever, then just ignore it. So I think a lot of the published research can be useful to us as retail investors to keep us informed, to tell us about trends which are ongoing which we might not have been aware of, but also to transform our views of what's going on in markets just like that SPE research or that 100 years of returns. All I'd say is be careful of the incentives of the publisher and just make sure that it's in your best interests as well as theirs. Now don't forget our offer from Saxo. As a VI of Pension Craft, you get a special time-limited offer from Saxo to invest.

in 100 popular US stocks commission-free. So, if you open an account using the link in the description below, you can make use of that offer. And as always, thank you for listening.

Best Investment Research To Help Inform Your Choices

My name is Ramin Nakisa and I started PensionCraft in 2016 as I felt strongly that I wanted to teach people how to invest well for themselves so they could stop making costly mistakes and losing their money through having to pay unnecessarily high fees.

Before starting PensionCraft, I worked in investment banking as a strategist and I was a frequent contributor on CNBC and Bloomberg TV. I have written two books about finance and investment: one for professional investors and one that explains how to buy and sell volatility using exchange-traded products.

I publish a new video on YouTube every Saturday and you can join me for a live Q&A on the 1st Thursday of every month at 7pm UK time.

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Investment research provides publications that inform individuals about investments, with common types including commercial research from firms like Peel Hunt and academic research from universities.

Commercial research often lacks peer review, while academic research undergoes a filtering process, providing an additional layer of credibility.

The video explores the different types of research, their reliability, and the sources that can help achieve financial goals.

Investment banks have analysts specializing in various sectors, producing economic research that informs the investment process.

They also have departments focused on interest rates, foreign exchange, and commodities, each offering insights and forecasts.

Additionally, free research from central banks and institutions like the IMF provides valuable information for retail investors.

The Impact of Social Media on Investment Decisions

Despite no signs of a recession in the US for 2024, people's perceptions of the economy were negative.

Many retail investors now rely on social media platforms like TikTok and YouTube for investment advice, raising concerns about the credibility of the information.

Saxo's new investment platform offers professional-quality research and expert analysis, along with features like stock screening and curated investment theme baskets, to help investors make informed decisions.

Investment research from banks can provide valuable insights and inform trading decisions, leading to profitable outcomes.

These institutions have extensive resources and specialized staff, making it difficult for individuals to replicate their analysis.

While research is beneficial, it's important to verify the information and be aware of the publishers' incentives.

Published research can influence counterparties to trade more often, potentially benefiting retail investors.

It's important to be cautious of the publisher's incentives and prioritize personal research.

The research can provide valuable insights into market trends and transformations, but investors should ensure it aligns with their best interests.