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  • Stock Newsletters: Are They Worth It?

    Posted by Frugal on June 26th, 2006

    A short answer: Most of the stock newsletters don’t worth the subscription price that you need to pay. But there are a few select ones that can really make you (some but not big) money. The problem is to know which ones beforehand.

    Because of the size of my portfolio, and the lack of my time to manage it, I feel the need to rely on external advices. I began subscribing various stock newsletters since two years ago. Very often, I put my own money at stake to experiment with the advices by stock newsletters, and more often than not, I lost many thousand dollars beyond a couple of hundred dollars in the subscription price. If you read any advices on stocks on my website, they have been filtered through me and my thousand dollars loss. But the experience of experimenting with different stock newsletters have been simply a very painful process of loss. Until today, I probably have lost more than five thousand dollars at the minimum relying on the advices from the bad stock newsletters.

    In case you run into some of the following stock newsletters, you may not want to subscribe to them after my painful loss.  By not subscribing, it could save you from lots of dollar from stock loss:

    1. www.changewave.com: a newsletter ChangeWave by Tobin Smith. He has a couple of category for aggressive investors for which he doesn’t put any performance number. Initially, I took his words. After losing more than 75% on EVOL, I finally saw what those categories were for. A dumping place for his recommendations that went bad. Maybe through the process of “natural selection”, the stocks that survive his recommendation give a good performance to his stock newsletters. I must give him a little credit on getting me started on my own research into the high yield dividend stocks. But anyone could have pulled a couple of his recommendation from a simple finance yahoo search.
    2. www.soundadvice-newsletter.com: a newsletter Sound Advice by Gray Cardiff. This one is almost like a scam, or his customer service is very poor. Personally, his advices sounded more like copy-cat and unconvincing to me. By his refund policy, you should be able to get a full refund during the lifetime of the subscription. Great advertising indeed. If you have taken his words, you may fall right into his trap. I couldn’t get any refund through repeated contact to the newsletter. Luckily before the 60 days of credit card dispute period is up, I disputed the charge through credit card company and got the full refund. And still absolutely no news from this newsletter.
    3. www.intelligencereport.com: a newsletter Intelligence Report by Richard C Young. This guy gives you probably close to 100 stocks, and probably some 40 mutual funds. He will add & subtract from his list, but he doesn’t keep a performance number since recommendation. Guess why? Because they don’t seem to be not that good. I did the due diligence of going back on his recommendations over two years period from his newsletter archives. I found out that overall the performance is not that great compared to other better newsletters. If you don’t show your performance number for buy & sell, there is probably not much to show anyway.

    So far, the best stock newsletters that I have subscribed in my opinion are

    1. Capital & Crisis by Chris Meyer
    2. Outstanding Investments by Justice Little & Kevin Kerr

    Both of the stock newsletters make pretty good stock recommendation, and their understanding of the stock & capital market is simply superb.

    If you know any bad stock newsletter, or any good stock newsletters, please share your recommendation with me & others by leaving a comment. Thanks.

    Again, a reminder on my legal disclaimer.  All advices are provided AS IT IS, and are based purely on my personal experiences.  Your experiences can vary, and the products mentioned can change better or worse over time too.


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    30 Responses to “Stock Newsletters: Are They Worth It?”

    1. Todd Says:

      I recently bought the 25% cash machine publication from ChangeWave. It was a pretty interesting read. It confirmed what I have been trying to figure out. I bought it mainly for a list of high dividend investments in different asset classes. I want to combine different investments to lower beta and hopefully mainly end up with the high dividend. The publication gets the 25% from 10% dividend income and 15% capital appreciation. The investments have to be activily followed in order to get in and out of the different sectors that are hot.

    2. frugal Says:

      Thank you for your input. I forgot which newsletter from changewave I subscribed to, but definitely not the one that you mentioned. I think Tobin has several publications.
      Feedbacks on newsletters are very hard to find. If you have any positive or negative experiences, they will all make this post more valuable. And more recent experiences the better, since the performance is usually a time-varying function.
      Please let us know how you do by following the newsletter. At least, I’m personally interested in the outcomes.

    3. Mighty Bargain Hunter Says:

      Carnival of Investing #29…

      Welcome to this week’s Carnival of Investing! Without further ado, here we go!

      Free Money Finance highlights a reader’s comment on how to pick a company with winning management.
      Who are mutual funds good for? Blueprint for Financial Pros…

    4. Keller Says:

      I too wanted some help with a straight forward process to investing some extra money. I used the Hulbert\’s Financial Digest from CBS.Marketwatch.com site to give me some long term independent results. From there I looked at ones that seemed to be easy to implement and satisfy my tax needs, meaning I don\’t want Short Term Cap Gains. I have been using the Turnaround Letter for 18 months now with good results. I am very disciplined with it. It recommends one new stock a month which I have been buying and annualized results for the last 18 months have been about what you would have gotten with a Small Cap Index, although his picks are across all categories.

    5. frugal Says:

      Thanks a lot, Keller. That will definitely save people from trial & errors. Unfortunately, there are more bad apples than good ones out there.

    6. John Says:

      To Frugal, others:
      I highly recommend looking into The Motley Fool and offering an opinion. All of their recommendations are highly lucrative and they have different newsletters for different investing styles (i.e. growth, income, and value among others). I plan to subscribe to their “Stock Advisor” newsletter in the next year or two. Anyhow, their subscription rates are a bit pricey–from $150 to $200 yearly–but I like to fancy the notion of “getting what you pay for.” Please offer your opinions; I’m still a novice investor, but it looks solid to me.

    7. frugal Says:

      I think Motley Fool is a little too young to be judged. Hulbert at the MarketWatch ranks some 200+ newsletters based on their historical and current performances or any kinds of measurements that you choose I believe, but it will take some $150 to find out what newsletters are good.

      I believe that newsletters are probably not for every investor. To duplicate the exact performance of a newsletter, you need to buy every stock that they recommend (or else you may be unlukcy to buy the under-performers in their recommended stocks). But to buy every stock (or close to every stock) that they recommend, it takes quite a bit money. Since I will recommend the trading commissions should be less than 0.5% of each transaction (including buy & sell), that will give you about $2000 or more for each stock that you should put in ($5 for buy & $5 for sell). Then you assume that you buy 10 to 20 stocks from their recommendation, you will need to have at least $20K to $40K of money.

      Furthermore, assuming that you don’t bet your farm on just one newsletter, but have at least 50% (or preferably 80%) of money invested using other methods, then you end up with a total portfolio size of $40K to $200K (using 80%).

      So if your portfolio size is not that big, I will advise you to stay with index funds.

    8. Boytoy Says:

      I tried several of the changewave publications and have lost a TON of money. They constantly hound you trying to sell subscriptions.
      While they sometimes comes up with profitable trades, if you review their sold list they appear to have many more losers that gainers. Tobin Smith is always bragging aboujt how much moeny they are making, yet they offer not performance. Simply looking at the sold list seems to indc iate that over 60% of their recommendations are loosers. Don’t make the same mistake that I did!

    9. frugal Says:

      Thanks Boytoy. Really appreciate your sharing of the experience. I lost money too, and I was not impressed at all by Tobin Smith. Too bad that there are so many subscribers out there who are probably losing money from his recommendations. His changewave seems to be quite popular for some reasons.

    10. Miles Says:

      My favorite publication is http://www.dowtheoryletters.com. He has been writing for over sixty years. I am looking for some other good publications.

    11. Frugal Says:

      Thanks Miles for your tip.

      I respect that publication, but don’t personally subscribe to it.

    12. David T Says:

      I agree that there are some really bad apples out threre, but i must disagree about sound advice (www.soundadvice-newsletter.com). I have been subscribing to that for about 8 years and have gotten some solid rec’s from them. I admit i have had some problems getting my isssues in the past, but they really seem to have gotten their act together latley…

    13. Frugal Says:

      David T,

      Glad to hear it’s improved. Things can change certainly after almost a year now.

    14. Crystal Says:

      I have been subscribing to Million Dollar Portfolio from the Motley Fool. I like the way they analyze the stock and do follow-ups. I can’t talk about performance yet, since I only started 3 months ago. But they seem to be honest, giving a honest performance report – every week you can see the performance of each of their newsletters versus the S&P 500 – in fact they send it to you by e-mail if you go for the free subscription. And for the past few weeks a couple of their newsletters have been doing worse than the S&P 500 or going into the negative. They also write articles about the stocks they chose which lost money.

      Another one I started on is Jeff Siegel’s Green Chip newsletter. Performance has been abysmal this year – but that is because all the ‘favored’ small caps have been getting hit by the market. However, their explanation of the selection process, follow-up on what is going wrong is perfunctory to say the least, more marketing than anything solid. I have stopped buying anything from their recommendations as a result. Just hoping that whatever I have bought will recover enough for me to get out without being skinned.

    15. Bob Says:

      Crystal,
      I am very curious about the Fool’s Million Dollar Portfolio but of course there are no performance stats published anywhere that I can find. Is there a public performance result posted anywhere that you know of?

    16. crystal Says:

      Bob,
      They just started it, and the first purchase was in October 07. It is not fully invested yet. I don’t think there is any public posting of performance. All I can remember is most of their selections did well during the recent upswing.

      But some stocks have crazy pricing – they go up 30%, then tumble down 25% in a matter of weeks. Now, if I were buying such a stock on my own, I would be wishing I had sold it when it was up 30%.

      With the Motley Fool, they put out enough analysis to convince me that they have researched the stock thoroughly and since they are putting their money and reputation on it, I assume they will be following it closely enough, so I don’t worry about it. With Jeff Siegel, I receive so little information, that I am selling off everything as soon as it goes up 5% or so, even though I know I should hold on to the winners to make up for the losers.

    17. Bob Says:

      Not to be syndical but I guess one could argue that if Motley Fool signs up 1,000 subscribers at $499.00 each then they make 50% on their money right away. So even if they are using their own money to invest it is not their performance that matters as much as the number of subscribers they can convince to keep their subscriptions for the full year.

    18. crystal Says:

      True. If you assume that they nobody at their end puts any time doing any research, they can just recommend any old company, get money off people and keep going, for however long. But they do seem to have a well-qualified staff, an office, and subscribers who interact with them face-to-face during their trips (they have trips to visit the companies), get-togethers etc. They also have a good performance on their other newsletters which have been going on for over 5 years at least.

      Even if they have a staff who are well qualified, and do real work researching companies for us, they are obviously aiming to make a profit on the whole venture (isn’t that what we want from the companies we invest in?). The question isn’t whether they make a profit, or how much they make, but whether they provide value for my money.

      So far it seems to me that they do. Time will tell!

    19. rookieram Says:

      Hi Frugal,
      I was a slient reader for a while on this site; do you think you’re stock newsletter recommendations are good for novice investor?
      BTW Capital & Crisis by Chris Meyer link is broken here

    20. arthur swanson Says:

      Richard Band and Richard Young have cost me lots of money. Fool’s million dollar portfolio is down 17.99% as we speak. I am down over $81k following all of their recommendations and percentage purchases.

    21. arthur swanson Says:

      Richard Band and Richard Young have cost me lots of money. Fool’s million dollar portfolio is down 17.99% as we speak. I am down over $81k following all of their recommendations and percentage purchases.

    22. arthur swanson Says:

      Richard Band and Richard Young have cost me lots of money. Fool’s million dollar portfolio is down 17.99% as we speak. I am down over $81k following all of their recommendations and percentage purchases.

    23. Bill Brennan Says:

      I have one… what about Louis Navelliers Newsletter ” Emerging Growth ” has anyone tried this newsletter? Any comments?

    24. James Eicher Says:

      I like many others have tried a variety of newsletters. I’ve lost money with all of them. (Motley Fool, Changewave, Bernie Schaeffer )
      Bill Kraft has the best information I have found. He has a book on trading that is one of the best I’ve ever read. If anybody knows a newsletter that really does what it says, I’d like to know about it.

    25. Doug H Says:

      Just an update to motley fool million dollar portfolio performance….I called today (11/10/09) and their “Charger” portfolio is down 22.9% since inception. However, they also said this was 2.6% better than S&P. That said one needs to know the stocks to adjust for risk.

    26. patti Says:

      I have used many different newsletters and I would definitely stay away from anything Louis Navellier or John Lansing have written. Parabolic Options from John Lansing is a joke. The best one I have found is Charles Nenner. He does not really advertise and I found him after hearing him being interviewed. His assistant actually calls you and discussed the type of investing you do and sees if you are a fit and they determine based upon the size of your portfolio what they will charge. He has been fantastic on his predictions for the market. I have tried over 15 different newsletters and his is really the only legitimate one I have found. Check him out

    27. Nats Says:

      I agree with Patti …Lansing is a joke ….i have lost tons of money with parabolic options, trending123, ken trester, and Chris Jhonson

      The only Newsletter that has work for me so far is TReasures under 10 http://treasuresunder10.investorplace.com/ Nancy Zambell is pretty good!!! Actually, I already paid 2 years of service. she gives very insightful analysis …

      Regarding options, I like option hotline the bad thing is that they dont tell you when to sell ….however if you dont get greedy you can sell when the option hits a 10 o 20%

      My dad really likes carla pasternak her picks are winners according to him!!

      Im a looking for a good options newsletter …..any suggetions???

    28. Penny Says:

      Nats,

      I think the best Options recommendations I have had is from a new service at Zacks.com called Zacks Options Trader.
      Kevin Matras gives almost perfect picks.

    29. KER CONSULTING, LTD. Says:

      Could anyone recommend a good newsletter that tracks the Federal Reserve and currency flows?

    30. Dave Says:

      I agree with Nats that http://treasuresunder10.investorplace.com/ (Nancy Zambell) is very good at analyzing small stocks. These are very volatile stocks and she recommends a 30% stop loss. Some of the stocks recommended give spectacular gains. So, it may be good for a small part of your portfolio. The current price is $199 for 18 months. I’ve made money on these stocks, but I do trade out when the general market is high and trade back in when it’s low.