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This story appears in the January 1999 issue of Entrepreneur. Subscribe »

What's the value of a whisper? According to the research of three university professors, whisper forecasts--the unofficial estimates of corporate earnings that circulate among traders and investors before official results are revealed--could help you fatten your investment portfolio.

In their year-long 1997 study, business professors Mark Bagnoli Messod, Daniel Benish and Susan Watts compared 943 whispers to more than 3,500 traditional analyst forecasts for 127 firms. They found that the whispers tended to be more optimistic than those coming from traditional analysts--and more accurate.

"Most of the whispers we found were for high-technology companies," Watts explains. "They tended to be fast-growing, young companies that don't have lengthy histories." This makes earnings statements very important pieces of information.

Before you begin frantically searching financial Web sites and discussion groups for whispers on hot stocks, consider this: Whispers are basically unsubstantiated rumors, and because it is impossible to know for sure who they come from, their credibility is sometimes suspect, Watts points out.

"Any time you use a whisper forecast [to buy stock], you run the risk of getting bad numbers," says Watts. "If you try to take a trading position on it, you have to be aware that while there are many good ones out there, clearly some of the ones we found were not very good."

So where is the place to look for "good" whispers? Watts advises logging on to the Web sites that are more established, like the Motley Fool ( and Silicon Investor ( And don't bet your retirement on what you hear.

Go Ahead, Take A Break

Lightening the small-business owner's tax burden.

Small businesses recently got a break from the IRS that aims to save their owners time and money. The IRS has raised the threshold for employment tax deposits from $500 to $1,000. The SBA estimates that 500,000 business owners won't be required to make employment tax deposits because of the move, though they must continue to file their income tax forms either on a quarterly or an annual basis.

The new ruling affects accumulated employment taxes such as Social Security, Medicare and withheld income taxes, reported and filed quarterly on Form 941 or annually on Form 943. Entrepreneurs who file quarterly are eligible to start using the higher threshold for the return period that began July 1, 1998; those who file annual returns are eligible for the period beginning January 1, 1999.

For more information about the change, contact the IRS office in your area.

Improving The SCOR

Stocks break through the red tape at state lines.

Entrepreneurs planning to issue their stock under the Small Company Offering Registration (SCOR) program can now sell in multiple states simultaneously, thanks to a new regulation.

Prior to this rule, small corporations and limited liability companies were required to submit a separate application to each state and meet each state's distinct filing requirements for selling there. Now a company completes and files an application, typically in the state in which the business is based, then forwards copies of the entire packet and the required fees to each of the states where it plans to sell stock.

For more information on whether your state offers the new option, contact your state securities commission office or visit

Contact Sources

Kansas Office of Securities Commissioner, 618 S. Kansas Ave., Topeka, KS 66603-3804, (785) 296-3307

SBA Office of Advocacy, (202) 205-6531

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