It’s theoretically possible that you could lose a lot of money by following stocks whose average return is quite impressive. That’s because the order in which those recommendations were made makes a big difference. It’s a good sign when a newsletter’s portfolio isn’t hypothetical but real world-and when the adviser offers to share brokerage statements with customers.īe skeptical of performance claims that are based on the average return of a list of recommended positions. Far more common is spinning the numbers in a way that implies something that is false. I say this because I have found that outright lying about performance by newsletters is relatively rare. Other things being equal, if you have doubt about a newsletter’s trustworthiness, you should give more credence to the performance numbers from an adviser who does provide this information, since advice this precise makes it difficult to fudge the numbers. If it includes numbers of shares or portfolio percentages assigned to each holding, all the better. If paper trading an adviser’s portfolio is too cumbersome, there are some rules of thumb that can be helpful…ĭetermine whether the adviser maintains a specific model portfolio. Pay close attention not only to whether your overall numbers match those quoted by the adviser but also such details as whether the execution prices you would be able to obtain in actual trading are close to what the newsletter reports. My first suggestion is, once you have chosen an investment newsletter, sign up for a trial subscription, if available, and “paper-trade” the recommendations over that trial period-that is, carry out the recommended transactions on paper rather than actually investing. Bottom Line Personal found Hulbert’s newsletter rankings to be so helpful over the years that we decided to ask its founder and editor, Mark Hulbert, to tell us how our readers can continue to assess the performance of newsletter advice… A ft er 36 years of objectively comparing the performance of investment newsletters, The Hulbert Financial Digest ceased publication this year.
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