My 1st Million At 33 – yes, you can do it too

When a stock newsletter tries to play game with the displayed performance number, you know there can be only one reason: the picks are not enticing enough for the readers, and needed extra boost. That’s the case with www.GoldDrivers.com.

I started subscribing to it at the very beginning of its “premium service” since the end of year of 2005. Initially, Eric Hommelberg had two lists. One is portfolio list, and another is watch list. Probably because the things that he added to watch list were going up a lot since gold was in a strong bull market. So around the beginning of 2006, he lumped the two lists into one list, and used the good performance from the watch list as part of his new portfolio/watch list. Although he only added those stocks to his watch list, and did not formally recommend those stocks, his new list of portfolio/watch list is full of good performing stocks.

And then in June 2006, he no longer display the full list of his recommendation of discovery portfolio and exploration portfolio. Instead in the newsletter and website, he only displays Discovery Top-10 portfolio. He still does new recommendations that go into the “Top-10″ portfolio list. But by not showing all those bad performers, an image of good performance can be created. If you recommend sufficient number of stocks, probabilistically speaking your chances of recommending a good performer goes up. And then if you selectively filter out the bad ones, certainly the list will be all good performers.

Nothing in any of the list in his newsletters is bogus. But the image created through selective lumping and filtering at different time is very deceiving. I just hate newsletters when they start to mess around with the images of their performance. If you cannot even be straight and forward about your performance record, what other things I can trust. Yes, if you dig hard enough, you may still find out the historical performance record. But as soon as a newsletter gives you that tough job of producing the actual performance number, you know that probably such numbers are not as enticing as the newsletter wants you to believe in.

Have I made money from www.golddrivers.com? Nope. His original portfolio/watch list is more than 20 small cap stocks, mostly trading at Canadian markets. It’s tough for an individual to pay $30+ commission each to buy every recommended stock. Some of his timing has been off too. He projected HUI to reach 430, while HUI peaked at around 400. Calls to buy a couple of stocks in 2006 has resulted (not small) losses too (but a few did make money).

Seeing that the lists in golddriver.com newsletter are filtered without displaying the original lists, I don’t think I will subscribe to his newsletter again. I don’t want to deal with people who try to do a good marketing. I want to deal with people who are straightforward about themselves.

I think I learned one more thing about stock newsletters. Never go for some newsletters that have LOTS of recommendation. First, a lot of recommendation is simply not practical for any readers to buy into. Secondly, lots of recommendation are usually prone to be filtered in some appealing way.

That’s my $99 subscription fee + all of my stock losses.

P.S. I’ve got all of the past golddriver.com newsletters saved to prove my case. Only if you’re so interested to find out the details, I can share bits with you as not to violate any copyrights.