Goldman Sachs has been subpoenaed by William Galvin, Massachusetts' secretary of the commonwealth, the state's chief financial regulator--Galvin is well known as an activist regulator going back to the Eliot Spitzer era. Galvin wants to know what Goldman's advisers are telling top clients and not the rest of the world, or even the rest of Goldman's account holders. A Goldman spokesman declined comment.  No matter how it turns out between Goldman and its regulators the whole episode gives retail investors yet another reason to believe that investing in stocks is a game that's rigged against them.  To be sure, investors have different needs. Goldman will likely defend itself by saying that it has certain research for shorter term traders and other research for long-term investors that is both the best it can be and that is distributed based on need.  Follow Intelligent Investing On Twitter.  Sign Up For The Daily Intelligent Investing Newsletter.  For individual investors the best choice is to treat Wall Street research the same way we treat a rearview mirror in a car--trust, but verify. Wall Street research is, even at its best, just an analyst's informed opinion. At its worst, it's corrupted by the other businesses that banks pursue. It's also largely way too optimistic.  Standard and Poor's rates stocks between "strong sell" and "strong buy"--only 14.8% of the stocks it covered got "sell" or "strong sell" ratings this year, 28% have been buys of strong buys--nearly twice the number of sells. No surprise, you can lose your job or your reputation putting a sell rating on the wrong stock. Some companies consider it a form a libel and are willing to go to court over it.  Dick Bove, senior vice president of equity research at Rochdale Securities, told Steve Forbes in an interview that he resigned from his previous post at Ladenberg Thalmann after a lawsuit involving BankAtlantic Bancorp ( BBXT - news - people ).  "But what is somewhat amazing is it certainly shut me down because I certainly would not take the risk of saying anything negative about BankAtlantic but certainly not about a whole wide range of banks. It controls the analysts' ability to be creative in looking at the industry because nobody can afford these lawsuits," he says. (See "Transcript: Dick Bove.")  When trying to research stocks on your own, start with the favorites owned by successful fund managers. Bruce Berkowitz's Fairholme Fund has consistently provided better returns than the S&P since its inception almost 10 years ago. (See "Berkowitz Beats The S&P").  Berkowitz isn't sector specific and his firm pours hours and hours into looking at company's financial statements. The fund's top 10 holdings include Pfizer ( PFE - news - people ), Sears Holdings ( SHLD - news - people ), Hertz Global Holdings ( HTZ - news - people ), The St. Joe Co. ( JOE - news - people ), AmeriCredit Corp. ( ACF - news - people ), Forest Laboratories ( FRX - news - people ), WellPoint ( WLP - news - people ), United Rentals ( URI - news - people ), Spirit Aerosystems Holdings ( SPR - news - people ) (Class A) and Leucadia National Corp. ( LUK - news - people ).  Investors are capable of doing their own fundamental research, including going through company financial statements, looking at price to earnings ratios and comparing companies across a sector, says Matt Samelson founder of research firm Woodbine Associates. Investors can also check to see if any company insiders are trading their stock. Samelson suggests investors do a "dry run" by following a company before they invest in it to check their own analytic skills before any money is at stake.  Jeff Rubin, director of research and a portfolio manager at Birinyi Associates, urges investors to maintain their own database of stock picks and investment advice from various analysts to gauge how consistently correct an analyst or a research company is. "This is indeed work, and not necessarily the easiest thing to do but neither was saving the $250,000 that is sitting in their 401(k) plan," he says.  Investors who do not invest with a money manager or investment adviser should also try to keep their investments as simple and mainstream as possible. Rubin looks at firms with high dividends, such as Verizon Communications ( VZ - news - people ) Inc. and Consolidated Edison Inc. ( ED - news - people ), and invests in companies that have steady, consistent returns.  Randy Carver, an investment adviser at Raymond James Financial Inc. ( RJF - news - people ), advises retail investors to stay away from single stock investing. "With single company issues, you have the additional risk of company specific problems," he says. Investors who are part of pooled investments or indexes have less risk than those with single stocks because if one stock tanks in an index, it likely won't take the whole fund with it. So you can get one call wrong but still see good returns.  Carver recommends research from Standard & Poor's and Value Line, Inc.  Forbes: In the news, Goldman Sachs ( GS - news - people ) was called out for having these trading huddles and coming up with certain stock picks that aren't disseminated to their whole client base. In light of research firms rarely suggesting to sell an investment and some firms offering certain clients one perspective on a stock while telling others another thing, how can retail investors get the best research possible? And should they be doing their own research to check against the research that they're getting? If so, how should they put together this research?  Jeff Rubin: The best research does not necessarily come from Wall Street or those that appear the most on TV or wherever. But one thing individuals can do to greatly enhance their knowledge and portfolio returns is to begin keeping a database of the predictions. So if Jeff Rubin says we are in a bull market, one can then look and see what he was saying in March or what he was saying in July of 2008. There are those analysts that do provide some useful advice, but the only way for individuals to know who they are is to track it.  This is indeed work, and not necessarily the easiest thing to do, but neither was saving the $250,000 that is sitting in their 401(k) plan.  The other rule I like to live by is KISS. So when I find names like Verizon paying 6% dividends or Con Edison at 6%, I get excited and only need another 4% in price appreciation to get to double-digit returns. While they are not exciting, they will provide steady consistent returns.  Randy Carver: Given the complexities of investing in individual equities, we feel that most individual investors should use pooled equity investments, rather than single stocks. To your question regarding how investors can get research, I feel there are two types of research; objective numbers and subjective opinions. With regard to the latter, I would stick with an institution with a proven record, but ultimately unless you are utilizing a professional manager (in which case you don't need the research) then the buy-sell decision is that of the investor. Predicting market trends over the short term is difficult if not impossible it's kind of like predicting the weather there are too many factors that you can't account for that may impact things. With single company issues you have the additional risk of company-specific problems.  Forbes: I was wondering then if there are any research companies that you stand behind. Also, speaking to Jeff's point, how do you determine whose picks to watch? Whose voices do you consider credible in the markets?  Carver: We would look at Value Line and S&P as the first two sources for a novice or small investor.  Get Intelligent Investing On Your iPhone.  See More Intelligent Investing Features.
Goldman Sachs has its favorite clients and you're likely not among them. Sure seems like you can't trust Wall Street advice. Here's how to do it yourself.