Author Topic: Stock picking newsletter subscriptions?  (Read 16951 times)

Megatron

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Stock picking newsletter subscriptions?
« on: June 02, 2014, 03:52:07 PM »
Over the weekend at a backyard barbecue, I got a chance to catch up with an old friend who I considered to be way more mustachian than me. He's done pretty well for himself moneywise. We were talking about early retirement and investments in general and I basically told him that I just max out 401k and Roth IRA every year and have a separate taxable Vanguard account for just buying up the same index funds but at admiral share prices. He told me that he subscribes to a stock picking newsletter. Similar to what The Motley Fool has. http://www.fool.com/shop/newsletters/index.aspx?source=ipesittph0000001
He pays close to $700 a year for this subscription. He said he has a portfolio of about 30 stocks and said it's been pretty profitable.

Intuition tells me that you can't beat the index in the long run, I just wanted to poll the mustachian community to see if anyone uses similar subscriptions or if they have any thoughts on this. Is it worth it? I have an etrade account that's been sort of coasting the last few years, I have about 12k in it, the bulk of which is dividend stocks. I started it when I was wee young and didn't know better. I've been too lazy to consolidate and I reason that it's now my "play money," since it's about 5% of my total investments. I'm just wondering if I should maybe use one of those subscriptions for stock picks or continue to coast along with dividend stocks or just cash out and buy more Vanguard funds.

any thoughts?

« Last Edit: June 02, 2014, 03:57:28 PM by Megatron »

wtjbatman

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Re: Stock picking newsletter subscriptions?
« Reply #1 on: June 02, 2014, 07:09:40 PM »
I pick individual dividend paying stocks, but I use free online resources like Yahoo/Google Finance and Seeking Alpha to help me with my research. I don't have enough invested, nor do I feel it's necessary for my strategy, to subscribe to a paid newsletter.

That said, I could see where people who are doing regular stock picking may want to subscribe to such a newsletter. Especially if they are doing real day trading or something similar. I know some of my favorite DGI writers who subscribe to a few newsletters/services, but they also do a lot more research overall since they write for sites like Seeking Alpha.

To answer your last question, I feel like it depends on your own finances. Do you have plenty saved up for retirement? Are you continuing to save? If that 5% of your portfolio disappeared overnight, would it set you back or ruin your plans for FIRE (if you have them)? If not, I say go for it.

Eric

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Re: Stock picking newsletter subscriptions?
« Reply #2 on: June 02, 2014, 08:03:39 PM »
I wonder if these financial picks newsletters are anything like sports gambling pick newsletters.  You know, send out 10 different sets of picks, one of them is bound to be right, then capitalize on the 10% of people who got the correct picks.  "See we're 10 for 10, you'd be dumb not to subscribe to our newsletter."

Argyle

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Re: Stock picking newsletter subscriptions?
« Reply #3 on: June 02, 2014, 08:31:43 PM »
$700 per year?  That's $7000 over ten years?  Jeepers.  What percentage of his holdings is that?  What percentage of yours would that be?

I imagine that overall, 50% of the time, their stock picks do better than the market.  And 50% of the time they do worse.  The question is: are you going to pick the right 50%?  Or you could just get a monkey to throw some darts at a list of stocks, and make a $700 bonus right there.

unix_kung_fu

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Re: Stock picking newsletter subscriptions?
« Reply #4 on: June 02, 2014, 08:48:17 PM »
I am currently reading the book 'The little book of common sense investing' by John Bogle (If that sounds familiar it is because he founded Vanguard). Almost immediately in the introduction and chapter one he talks about (and backs up with data) that this is always a losing proposition. That $700 would be much much more in 20-30 years with compound interest, etc.

He goes on to emphasize that by avoiding all fees, charges, and taxes where possible and emulating the market, not trying to beat it, via index funds will give you the better return, risk vs reward, every single time.


RapmasterD

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Re: Stock picking newsletter subscriptions?
« Reply #5 on: June 02, 2014, 09:12:16 PM »
Here are my thoughts.

NO.

SDREMNGR

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Re: Stock picking newsletter subscriptions?
« Reply #6 on: June 02, 2014, 09:42:51 PM »
I would say no but talk to your friend and if you are truly interested, get him to set up an auto forward and maybe split the cost.  I'm sure this violates the agreement of the newsletter but it's your call.

Hamster

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Re: Stock picking newsletter subscriptions?
« Reply #7 on: June 02, 2014, 10:05:35 PM »
Here are my thoughts.

NO.


Agreed.

Before you even consider such a thing, read A Random Walk Down Wall Street. I think it will disabuse you of the notion that these newsletters have any value at all.

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #8 on: June 02, 2014, 11:34:46 PM »
I've been subscribing to the Morningstar Dividend Investors newsletter pretty much since the beginning.  It is  real money portfolio, unlike the Motley Fools generally awful newsletters.  Its been years since I subscribed so they may have changed.

Over the 9+ years its beaten the S&P by 2.2% a year and just as  importantly taken lower risk.

Most of his picks are pretty common to most dividend strategies, Coke, GE, Wells Fargo, Clorox etc.  But he also provides some valuable insights into some mid cap stocks and lots of info on Master Limited Partnership which account for most of his out performance.

The trial newsletter is free and includes some nice tutorials on dividend investing and master limited partnership. The price is $150-$190

http://mdi.morningstar.com/Default.aspx

« Last Edit: June 03, 2014, 03:20:33 AM by clifp »

wtjbatman

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Re: Stock picking newsletter subscriptions?
« Reply #9 on: June 02, 2014, 11:52:28 PM »
I've been subscribing to the Morningstar Dividend Investors newsletter pretty much since the begging.  It is  real money portfolio, unlike the Motley Fools generally awful newsletters.  Its been years since I subscribed so they may have changed.

Over the 9+ years its beaten the S&P by 2.2% a year and just as  importantly taken lower risk.

Most of his picks are pretty common to most dividend strategies, Coke, GE, Wells Fargo, Clorox etc.  But he also provides some valuable insights into some mid cap stocks and lots of info on Master Limited Partnership which account for most of his out performance.

The trial newsletter is free and includes some nice tutorials on dividend investing and master limited partnership. The price is $150-$190

http://mdi.morningstar.com/Default.aspx

I wouldn't mind having a subscription to Brad Thomas' newsletter over at http://www.ireitinvestor.com/, but even at $99 a year it wouldn't be worth it to me. I'll just keep reading his articles for free on his website or on SA. I've become a pretty big fan of his writings on REITs.

butchmonkey

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Re: Stock picking newsletter subscriptions?
« Reply #10 on: June 03, 2014, 07:29:06 AM »

I've been subscribing to the Morningstar Dividend Investors newsletter pretty much since the beginning.  It is  real money portfolio, unlike the Motley Fools generally awful newsletters.  Its been years since I subscribed so they may have changed.

Over the 9+ years its beaten the S&P by 2.2% a year and just as  importantly taken lower risk.

Most of his picks are pretty common to most dividend strategies, Coke, GE, Wells Fargo, Clorox etc.  But he also provides some valuable insights into some mid cap stocks and lots of info on Master Limited Partnership which account for most of his out performance.

The trial newsletter is free and includes some nice tutorials on dividend investing and master limited partnership. The price is $150-$190

http://mdi.morningstar.com/Default.aspx

I am glad that you have found a strategy that works for you but I would push back on this claim that your dividend stock collection has beaten the S&P despite lower risk.

While it may be true, a more meaningful question would be, has it beaten an index with a similar exposure to the value factor?

Also such claims often ignore the transaction  costs required for individual stock purchase. (And the cost of the newsletter itself !)


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foobar

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Re: Stock picking newsletter subscriptions?
« Reply #11 on: June 03, 2014, 08:11:16 AM »
Nope. You just make the same predication every year (market is correcting 30%) and eventually their right and brag about it. I had a guy who talked about the coming real estate bust and how we would buy properties for .50 on the dollar. He forgot to mention it would take 10+ years for it to happen.

If you only pick only pick 20-30 stocks, that is a small enough number that you can get lucky and outperform the market.

There is a reason why these people are trying to make money selling newsletters at 200 bucks a pop rather than setting up a mutual fund and making the money themselves.

I wonder if these financial picks newsletters are anything like sports gambling pick newsletters.  You know, send out 10 different sets of picks, one of them is bound to be right, then capitalize on the 10% of people who got the correct picks.  "See we're 10 for 10, you'd be dumb not to subscribe to our newsletter."

livingthedream

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Re: Stock picking newsletter subscriptions?
« Reply #12 on: June 03, 2014, 11:36:20 AM »
Mark Hulbert tracks a lot of these newsletters and you can read his column for free at Marketwatch.com -

"The median newsletter portfolio trailed the S&P 500 by 1.3 percentage points a year, and the median domestic stock fund lagged behind by 0.3 point a year.

To be sure, returns much greater than these aren’t unheard of over shorter periods. But invariably, they come back to earth. When confronted with an adviser promising huge returns, you therefore can confidently bet that his advertising either is outright misleading or reflects performance over such a short period as to be unsustainable.

Your proper response in either case is the same: Ignore him.

Since the vast majority of stock-market advisers trail the return of the market itself, the safest bet for the domestic stock portion of your portfolio is an index fund benchmarked to the broad stock market."

http://www.marketwatch.com/story/make-more-money-by-dumping-your-investment-adviser-2014-05-30?pagenumber=1

Another good columnist at Marketwatch is Paul Merriman - http://www.marketwatch.com/story/portfolio-killers-5-common-investing-myths-2014-05-21

KingCoin

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Re: Stock picking newsletter subscriptions?
« Reply #13 on: June 03, 2014, 06:16:53 PM »
In short, this is a two part question:

1) Do you believe newsletter writers can beat the market?
2) Do you want to invest the time to be an active portfolio manager?

1) Livingthedream offered some good statistics to suggest that newsletter writers can't beat the market. Even if a specific letter writer offers up a "track record", it's hard to verify past results, identify luck and systematic market bias, and back-filter for selection bias. When someone comes to you with the proposition that they can "beat the market", it's wise to be skeptical.

2) Are you ready to:
a) Spend lots of time reading research reports and identifying when it's time to buy and sell?
b) Monitor cash balances and other active investor allocation policies?
c) Make sure your portfolio construction makes sense? Are you diversified across industries? Is your portfolio beta in line with the market's?
d) Constantly compare your performance with the market's and decide whether your newsletter is useful or destructive?

I'm guessing the answer to both (1) and (2) is no. So index on. Enjoy life and revel in a self-congratulatory chuckle when the "guy the barbecue" gets wiped out when the next bubble bursts.
« Last Edit: June 03, 2014, 06:19:58 PM by KingCoin »

hodedofome

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Re: Stock picking newsletter subscriptions?
« Reply #14 on: June 03, 2014, 07:50:36 PM »
A better statistic is not can newsletter writers beat the market, but can individual investors that subscribe to the newsletters perform as good as the writers themselves. There's tons of stats that show that managers perform at a certain level, but their investors perform much worse. Joel Greenblatt showed that investors in his magic formula strategy who managed their own accounts vastly underperformed separate accounts that were controlled by Joel. Market Wizard Tom Basso wrote a book called Panic Proof investing that describes this and how to invest in managers and strategies.

The problem is that the newsletter guy has a strategy that he believes in, has researched it and has used it for years. You on the other hand don't know his strategy, don't have experience with it and therefore don't have the conviction to stick with it during the bad times. The first several losing trades in a row will cause you to give up on it, just as the strategy starts performing again. Once you've seen it do well, you'll buy in again only to start the cycle all over again. It's classic buy at the top sell at the bottom that individual investors do with stocks. It's no different with strategies. It's you that's the problem, not necessarily the strategy. However, this is assuming you can find a newsletter that actually performs.

KingCoin

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Re: Stock picking newsletter subscriptions?
« Reply #15 on: June 03, 2014, 08:04:07 PM »
A better statistic is not can newsletter writers beat the market, but can individual investors that subscribe to the newsletters perform as good as the writers themselves. There's tons of stats that show that managers perform at a certain level, but their investors perform much worse. Joel Greenblatt showed that investors in his magic formula strategy who managed their own accounts vastly underperformed separate accounts that were controlled by Joel. Market Wizard Tom Basso wrote a book called Panic Proof investing that describes this and how to invest in managers and strategies.

The problem is that the newsletter guy has a strategy that he believes in, has researched it and has used it for years. You on the other hand don't know his strategy, don't have experience with it and therefore don't have the conviction to stick with it during the bad times. The first several losing trades in a row will cause you to give up on it, just as the strategy starts performing again. Once you've seen it do well, you'll buy in again only to start the cycle all over again. It's classic buy at the top sell at the bottom that individual investors do with stocks. It's no different with strategies. It's you that's the problem, not necessarily the strategy. However, this is assuming you can find a newsletter that actually performs.

Extremely valid point. Yet another layer of things than can go wrong by trying to manage a stock-picking portfolio, even one based on valid principals.

AmericanEagle

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Re: Stock picking newsletter subscriptions?
« Reply #16 on: June 03, 2014, 08:53:51 PM »
Eons ago I once subscribed to the Forbes Special Situation Survey and then to one of the Motley Fool newsletters.
I preferred the fool newsletter as it focused on educating the reader and didn't take itself quite so seriously.
However, as I said it was just one run for both newsletters.  Mostly, they give you investment ideas.  All you need to do is look out there and ideas plentiful and free.  Forbes Magazine (the magazine, not any newsletter) is a great source of ideas, and it's focus is on high net worth individuals so there is interesting stuff that goes beyond the basic finance info you find elsewhere.   I do have a subscription to forbes.  Any further research I do online.

Megatron

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Re: Stock picking newsletter subscriptions?
« Reply #17 on: June 04, 2014, 01:31:43 PM »
Wow, thanks for all the insightful replies.
At the least, I am satisfied that my intuition is aligned with most of the mustachians here.


KBecks2

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Re: Stock picking newsletter subscriptions?
« Reply #18 on: June 05, 2014, 04:49:04 AM »
I subscribe to a few Motley Fool Newsletters - Rule Breakers, Stock Advisor, Options and Pro.  Our portfolio for individual stocks is > $300k; the expense is under 1% annually. 

I am learning to use options to generate income off a cash balance, and it has been fascinating and fun. 

It is hard to measure returns.  My scorecard at the Fool shows that I am under the S&P by about 0.84%, but that does not include both my options profits and dividends.  I think if I included those returns I would be matching the market or doing just a little better. 

My goal is not to beat the market.  My goal is to invest so that I will make money and beat inflation every year, and avoid losing capital -- regardless of the market direction.  I want my money to grow every year.  This means I am starting to learn about shorts and hedging in addition to long stocks and options.  Most of this learning is by following the Pro service, which is a $2M real money portfolio model with 3 advisors and about 30 positions.

I've only been subscribing to paid Fool services for about 9 months, so it is hard to say how it's going so far, but I am satisfied with the experience and I like being involved with managing my money.  I am a Kiyosaki fan and I do like his advice to spend time learning about investing. He recommends that if you are investing in the stock market, to learn about options -- and that has led me to the Fool's Pro and Options services.

I am also interested in real estate investing.

Hope that helps. I also like Vanguard index funds very much and think that's a very good option too.





Argyle

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Re: Stock picking newsletter subscriptions?
« Reply #19 on: June 05, 2014, 08:16:45 AM »
KBeck2, if you're just at the market level (which could be equalled by an index fund) -- does that count the price for all the subscriptions?

WillPen

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Re: Stock picking newsletter subscriptions?
« Reply #20 on: June 05, 2014, 08:28:59 AM »
My father in law swears by Louis Navellier's Blue Chip Stock newsletter. He and his business partner have supposedly made a lot by following his picks -- especially over the past few years (who hasn't, though?). I think it's $100-$200 a year for 12 issues.

He'll get dinged pretty good when another big dip in the market comes. It'll sting for sure. I still find it interesting to read when I get my hands on a copy. He spends lots of time benchmarking himself and his portfolio against the S&P 500.

There is no point in reiterating what so many wise folks on here have said -- No one can beat or time the market, especially if they're picking and choosing which advice to follow from experts. The longer you drag out your time period, the harder and harder it is to do.




TreeTired

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Re: Stock picking newsletter subscriptions?
« Reply #21 on: June 05, 2014, 10:19:02 AM »
Caution!     (The sky is falling the sky is falling!!!!)   LOL,  as an aside I love how the stock market keeps powering higher as cash sits on the sidelines and forecasters keep predicting a correction.... or a crash.... or a bear market.

But back to my caution...   many strategies (like stock picking and put writing and buying dips and buying new highs)  work very well in a bull market and not so well in a bear market.   This is a bull market.

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #22 on: June 06, 2014, 03:47:52 PM »
Nope. You just make the same predication every year (market is correcting 30%) and eventually their right and brag about it. I had a guy who talked about the coming real estate bust and how we would buy properties for .50 on the dollar. He forgot to mention it would take 10+ years for it to happen.

If you only pick only pick 20-30 stocks, that is a small enough number that you can get lucky and outperform the market.

There is a reason why these people are trying to make money selling newsletters at 200 bucks a pop rather than setting up a mutual fund and making the money themselves.

I wonder if these financial picks newsletters are anything like sports gambling pick newsletters.  You know, send out 10 different sets of picks, one of them is bound to be right, then capitalize on the 10% of people who got the correct picks.  "See we're 10 for 10, you'd be dumb not to subscribe to our newsletter."

The other benchmark he compares his performance to the is the Morningstar Dividends Leaders index which he has beaten by 3.0% over 9+ year (it has trailed the S&P).

Lower expenses is one of the benefits of the newsletter approach.  Last year he  had 15 transactions (I had 10) in portfolio of ~35 stocks, 10 x $9= $90 + newsletter cost $160 = $250
$250/$1,707,013 = Expense ratio of .015% or less than 1/3 the cost of an Vanguard Total Stock Market ER of .05%.  Meaning I save $600 a year in expenses versus the high cost :-) Vanguard funds.  I also have 7  index ETF, primarily to gain access to the growth stocks and international stocks, but it is somewhat galling to see that some of those Vanguard funds have  high expense VEU (international) is .15% or ten times mine.  It is not worth the tax hit to sell to save the .1% per year.

As far as individual performance. The Schwab portfolio tools say I beat my target 80/15/5 portfolio by 2.2% (virtually the same as the newsletter writers) over the last 10 years with 1.7% lower volatility.

I do agree that most newsletters aren't worth it and I personally will never subscribe again to a newsletter which isn't a real money portfolio cause it is is too easy to fudge the data without using real money. For example cherry picking the price you got to buy and sell a stock within +/- 1 day.  But just because the majority fail to beat the market doesn't mean some can't. 

Argyle

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Re: Stock picking newsletter subscriptions?
« Reply #23 on: June 06, 2014, 04:31:46 PM »
By the laws of chance, it's almost inevitable that some of them will beat the market.  For a while.  It's a question of knowing which ones, ahead of time.  And then stopping before they stop beating the market.  Crystal balls can be profitable.

KBecks2

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Re: Stock picking newsletter subscriptions?
« Reply #24 on: June 06, 2014, 05:10:28 PM »
KBeck2, if you're just at the market level (which could be equalled by an index fund) -- does that count the price for all the subscriptions?

I don't think so.  The newsletters would be about a $1k drag on an approx. $400k investment port, which is approximately 0.25% annual expense.  I'm learning to make options income every month, I should be able to cover the newsletter fee with 1 - 2 months of option income.

Anyway, I am getting an education and I am getting help with investing.  I would not do it alone, I would do an index fund.  But I want to learn how to invest better / safer, and I enjoy the advisors of the services i subscribe to and feel my goals align with their purpose.

Karen

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #25 on: June 06, 2014, 05:59:56 PM »
By the laws of chance, it's almost inevitable that some of them will beat the market.  For a while.  It's a question of knowing which ones, ahead of time.  And then stopping before they stop beating the market.  Crystal balls can be profitable.

I completely agree that it is hard to know in advance who will prove to be a good stock picker. In fact, in order to properly evaluate a good money manager/newsletter editor, you need to be pretty smart about investing.  In the same way that it helps to very knowledgeable about medicine, the law, real estate, or plumbing, in order to pick a good doctor, lawyer, real estate broker or plumber.

Why do they have to stop beating the market, why can't they continue to outperform the market until they retire?. 

Argyle

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Re: Stock picking newsletter subscriptions?
« Reply #26 on: June 06, 2014, 06:33:18 PM »
Because the reason they're beating the market is chance.

waltworks

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Re: Stock picking newsletter subscriptions?
« Reply #27 on: June 06, 2014, 06:42:56 PM »
We need a sticky for this, because we all repeatedly say the same things:

-Math nerds/statisticians/bogleheads/people who don't want to spend all their time researching stocks: you can't beat the market over the long term except through luck, so control things you can (fees) and just index everything. Since millions of people are playing the game, a bunch of them will win even over pretty long time periods but that's just random chance. If a million monkeys picked stocks some of them would beat the S&P 10 years in a row too. That doesn't mean you should pay those monkeys to pick stocks for you.

-Stock picker/alpha seeker/market timer folks: I/this one guy/newsletter/company/monkey did better than the index/market so you're wrong.  I have this magic 8 ball/formula/strategy/etc and I'm up x% more than the market.

You can decide what's more convincing to you, I suppose, but aren't we all tired of the debate?

-W




hodedofome

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Re: Stock picking newsletter subscriptions?
« Reply #28 on: June 06, 2014, 10:14:37 PM »
We need a sticky for this, because we all repeatedly say the same things:

-Math nerds/statisticians/bogleheads/people who don't want to spend all their time researching stocks: you can't beat the market over the long term except through luck, so control things you can (fees) and just index everything. Since millions of people are playing the game, a bunch of them will win even over pretty long time periods but that's just random chance. If a million monkeys picked stocks some of them would beat the S&P 10 years in a row too. That doesn't mean you should pay those monkeys to pick stocks for you.

-Stock picker/alpha seeker/market timer folks: I/this one guy/newsletter/company/monkey did better than the index/market so you're wrong.  I have this magic 8 ball/formula/strategy/etc and I'm up x% more than the market.

You can decide what's more convincing to you, I suppose, but aren't we all tired of the debate?

-W

The reason the EMH is not settled in this forum is the same reason it is not settled in the financial and academic communities. There is evidence, PhDs, and evangelists on both sides of the argument and we are far from declaring either side a winner. Both Fama and Schiller got Nobel prizes last year.

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #29 on: June 06, 2014, 10:42:43 PM »
We need a sticky for this, because we all repeatedly say the same things:

-Math nerds/statisticians/bogleheads/people who don't want to spend all their time researching stocks: you can't beat the market over the long term except through luck, so control things you can (fees) and just index everything. Since millions of people are playing the game, a bunch of them will win even over pretty long time periods but that's just random chance. If a million monkeys picked stocks some of them would beat the S&P 10 years in a row too. That doesn't mean you should pay those monkeys to pick stocks for you.

-Stock picker/alpha seeker/market timer folks: I/this one guy/newsletter/company/monkey did better than the index/market so you're wrong.  I have this magic 8 ball/formula/strategy/etc and I'm up x% more than the market.

You can decide what's more convincing to you, I suppose, but aren't we all tired of the debate?

-W

I think strong EMH is dead outside a small number of academics. It defies common sense to pretend that valuing stocks, bonds, or real estate, doesn't require skill and that some people aren't able to do it better than others. 

People make the leap that just because on average actively managed MUTUAL FUNDS fail to beat the indexes, to conclude that individuals can't beat the market except by luck, despite tons of individuals who prove the contrary.

« Last Edit: June 06, 2014, 11:02:02 PM by clifp »

waltworks

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Re: Stock picking newsletter subscriptions?
« Reply #30 on: June 07, 2014, 12:01:21 AM »
Yes, but you'd *expect* tons of people to beat the market every year, just because there are so many participants, just through chance. And you'd expect many, many, many of them to beat it many years in a row for the same reason. With a really big population of investors you will get loads of people who flip heads 10 times in a row.

The economics "Nobel" is a bunch of hooey IMO anyway. :P

Like I said, we're just saying the same thing over and over here. Howzabout a sticky and we debate something else?

-W


I think strong EMH is dead outside a small number of academics. It defies common sense to pretend that valuing stocks, bonds, or real estate, doesn't require skill and that some people aren't able to do it better than others. 

People make the leap that just because on average actively managed MUTUAL FUNDS fail to beat the indexes, to conclude that individuals can't beat the market except by luck, despite tons of individuals who prove the contrary.

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #31 on: June 07, 2014, 02:46:26 AM »
Yes, but you'd *expect* tons of people to beat the market every year, just because there are so many participants, just through chance. And you'd expect many, many, many of them to beat it many years in a row for the same reason. With a really big population of investors you will get loads of people who flip heads 10 times in a row.

The economics "Nobel" is a bunch of hooey IMO anyway. :P

Like I said, we're just saying the same thing over and over here. Howzabout a sticky and we debate something else?

-W


I have been reading retirement boards for 14+m years.   You can make a pretty good case that you could sticky everything, from paying off the mortgage, withdrawal rates, will you be bored, should you include Social security and probably 20 other topics..

While 90% of the time no ones minds is changed at times, I've made an 180 degree turn on my thinking a few times after a good debate, and often I make 45 degree shift.

But if you think the EMH explains everything than it is pretty pointless to discuss newsletters or anything else but index funds.

arebelspy

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Re: Stock picking newsletter subscriptions?
« Reply #32 on: June 07, 2014, 02:52:16 AM »
I lean towards a version of weak EMH.

I do think individuals can beat the market, but that it's quite rare and that since nearly everyone feels they personally can do it, at least initially (myself included), it's a dangerous thought for most new investors - better to teach them about Index Funds than have them think they will be one of the rare few.

It takes a lot to beat the market, and intelligence isn't a sufficient condition.
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clifp

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Re: Stock picking newsletter subscriptions?
« Reply #33 on: June 07, 2014, 04:04:46 AM »
I lean towards a version of weak EMH.

I do think individuals can beat the market, but that it's quite rare and that since nearly everyone feels they personally can do it, at least initially (myself included), it's a dangerous thought for most new investors - better to teach them about Index Funds than have them think they will be one of the rare few.

It takes a lot to beat the market, and intelligence isn't a sufficient condition.

I agree. Although I believe in  a pretty weak EMH, cause I am hard pressed to reconcile  bitcoins, 1999 internet stocks, 2007 real estate, Q4/08-Q2/09 stock prices, with a very efficient market.

Especially for new investors or anybody with less than 25K or perhaps 100K in investments, index funds are the way to go. 

But lots of people want to try picking individual stocks, or learn about things like options for a variety of reasons.   As long as you are getting a newsletter well regarded by Mark Hulbert I think it probably a better way to go than say stock picking by relying on say internet discussion boards or CNBC.

I will say that even the worse newsletters (some of the Motley Fool ones) I tried as a free trial I learned something from.  A couple like Value Line and the dividend letter were quite educational. 

Almost all newsletter offer a 30-90 day free trial so really can't hurt to try them.

arebelspy

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Re: Stock picking newsletter subscriptions?
« Reply #34 on: June 07, 2014, 10:15:27 AM »
I agree. Although I believe in  a pretty weak EMH, cause I am hard pressed to reconcile  bitcoins, 1999 internet stocks, 2007 real estate, Q4/08-Q2/09 stock prices, with a very efficient market.

Irrationality in the moment can override, but due to the efficiency it pretty quickly* gets back to a rational valuation.

I think it was the market being efficient that caused a coming to earth of 1999 internet stocks, 2007 real estate, 2008-2009 stock prices to bounce back, etc.  In other words, that reversion to the mean is partially from the efficiency of the market.  When it gets too far over- or under-valued, the market adjusts to fix that.

*Depending on your definition of pretty quickly.  It can stay out of whack for a few years, hard to imagine it taking longer than that, given the speed at which things move today, but having said that I fully expect to get burned by that quote years from now.  :D
« Last Edit: June 07, 2014, 10:17:21 AM by arebelspy »
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

Argyle

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Re: Stock picking newsletter subscriptions?
« Reply #35 on: June 07, 2014, 01:03:48 PM »
There's an additional detail we're not really talking about.  Let's accept that out of a very great many people attempting to do so, some people really do know how to pick the right stocks.  This is going to be a subset of all the people claiming they know how to pick the right stocks.  (They probably all believe it.  But some of them are wrong.) 

Because by chance some picks will outperform the market, some people who are trying to pick stocks, but who don't really have the skill, will still outperform the market.  For quite some time, chances are.

How do you separate the ones who really can from the ones who merely claim they can?  Both categories will have some folks whose picks outperform the market.  (Until they don't.)

So you have to have skill in picking the people who pick the stocks.  And many people think they have the skill when they don't. 

Do you have the skill?  It's a gamble.  Literally it's a gamble.

Reepekg

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Re: Stock picking newsletter subscriptions?
« Reply #36 on: June 07, 2014, 01:47:17 PM »
They only stock picking newsletter you should be thinking about is the one you could be typing up to sell to amateur investors for $100 a pop!

FireYourJob

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Re: Stock picking newsletter subscriptions?
« Reply #37 on: June 07, 2014, 02:38:37 PM »
I've always like Bob  Brinker.  I've bought it some years for $185 for the year.  He'll send you a free sample issue to give you a feel for the content.  He's mostly an index or low fee mutual fund investor and has compounded well since his radio program came online in 1986. 

He still does the show every weekend and you can by the pod cast for about $5 per month.

The key is knowing when to sell probably more than when to buy.  If you're a perma buy and hold and just keep investing type, it's really not worth buying any of the newsletters.  If you believe there is some analysis that a "pro" can tell you when to sell and when to get back in, I'd recommend Brinker's Market Timer newsletter as a cost effective option compared to his peers.

Notice that Jim Cramer and the Fast Money types weren't beating their desks telling you to sell in late 2007 and 2008 so you'll never get that type of information from the more mainstream market analysts on tv and even in print.

clifp

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Re: Stock picking newsletter subscriptions?
« Reply #38 on: June 07, 2014, 03:23:51 PM »
There's an additional detail we're not really talking about.  Let's accept that out of a very great many people attempting to do so, some people really do know how to pick the right stocks.  This is going to be a subset of all the people claiming they know how to pick the right stocks.  (They probably all believe it.  But some of them are wrong.) 

Because by chance some picks will outperform the market, some people who are trying to pick stocks, but who don't really have the skill, will still outperform the market.  For quite some time, chances are.

How do you separate the ones who really can from the ones who merely claim they can?  Both categories will have some folks whose picks outperform the market.  (Until they don't.)

So you have to have skill in picking the people who pick the stocks.  And many people think they have the skill when they don't. 

Do you have the skill?  It's a gamble.  Literally it's a gamble.

There are many human activities which have significant elements of luck associated with them,  sales, creating: music, movies, computers games, advertising or art, coaching, poker, and even figure skating and certainly any type of investing.   In fact pretty much activity that involves the actions of others involves luck. It is hard to separate out  skill from luck even over long periods of time.  E.g. the Cinderella team that makes the Super Bowl, cause whenever they played the best teams their opponents superstar player were out with injuries,  won two games from bad calls, and two others cause TD were in/out of bounds by inches.  At some point people will say the team is really great.  The team reaches the Superbowl and gets blown out 43-8 by a much better team. (Any resemblance to any actual team is purely coincidental.) 

I play a fair amount of poker.  If somebody wants to become better poker player I give them book recommendations, I don' say that is waste of money cause only a small percentage of people making money playing poker.

Of course investing unlike poker isn't a zero sum game and the rake is a lot bigger in poker.

 

Wow, a phone plan for fifteen bucks!