In Brief

By Eric Roston

INITIAL PUBLIC OUTRAGE It's open season on stock analysts. Merrill Lynch last week prohibited its analysts from owning equity in companies they cover, and the SEC recently issued an alert, cautioning investors that investment banks' brokerage interests potentially compromise their researchers' independence. Investars.com an information service, illustrates that potential: its models show that in the past four years stocks bought and sold based on analyst recommendations have dropped 52.4% when analysts' firms underwrote the IPO and 4.6% when they didn't.

Vested Interest?

Investment bank IPO return Non-IPO return

CSFB -52.78% 9.87% AG Edwards -0.75% 1.59% Salomon SB -43.04% -0.27% Merrill Lynch -37.11% -2.72% Morgan Stanley -44.03% -1.46%

Source: investors.com

SEEK OTHER OPTIONS Why invest $10,000 in stocks for a $1,000 return when $1,000 in futures options may yield the same amount? Because there's a risk of losing much more than you have invested. That said, investors experienced in derivatives risk and strategy can use new brokerage websites dedicated to options. Others can study up with groups such as Optionetics.com an investor- education company. But remember, as a company official says, if you're not careful, "it's entirely possible to get hosed."

IN PROPERTY WE TRUST Real estate investment trusts generate money from property holdings. REITs argue they're normal operating companies unrepresented in the S&P 500. Special tax laws categorize REITs as nonequity assets, but growth in the '90s--from a $9 billion market cap to $139 billion--may have changed that. S&P will soon decide the trusts' status. Separately, three investment firms last week tweaked their REIT accounting, saying they'd forecast results per share, as with equities.

--By Eric Roston