Best technology investment newsletter
For decades, people have paid handsomely to subscribe to investment newsletters in hopes of outperforming financial markets. The advice contained in these newsletters ranges from timing when to move your money in and out of stocks, to telling which stocks will outperform in the future. Many claim to be wildly successful.
Investment newsletter expert Mark Hulbert wrote a great piece for Barron's last week entitled "Newsletter returns: be skeptical." Below is a look at some of his key points, as well as a brief analysis.
In his article, Hulbert examines specific investment newsletter claims, such as one by Mark Skousen claiming 145 percent annualized return for the past five years. Hulbert cites several examples of ridiculously high returns and then pours through each newsletter to determine if the claims have merit. Spoiler alert - they don't.
Hulbert offers the following advice to investors: Be skeptical, look for objective verification, and apply a reality check. For the reality check, he uses Warren Buffet to illustrate that few if any have achieved his long-run returns.
While Hulbert's advice is good, here's a far simpler analysis - apply some uncommon common sense. Investing $10, 000 with a 145% annualized return would yield a portfolio worth $882, 700 in that five year period. And in only 24 years, the portfolio would be worth $21.9 trillion, more than enough to pay off the U.S. national debt of just under $17 trillion. Now if earning high returns were only that simple, we'd be a nation of trillionaires.
Hulbert does a great service to investors by examining these claimed high returns. Now all investors need to do is apply a common sense filter and save some time with that due dilligence. Applying common sense is as simple as asking oneself whether anyone with market besting returns over many years would still be trying to sell newsletters at $299 a year for an annual subscription. Common sense would dictate that someone racking up such market trouncing returns should be very wealthy. And if they actually did have such market winning advice to offer, why wouldn't they pitch it to institutional investors who, after auditing for authenticity, would be willing to pay at least tens of millions of dollars?
Why then do such newsletters exist? Because enough people want to invest successfully and build wealth, and have the ability to suspend common sense in pursuit of that goal. Don't be one of those.
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If you want to use investment newsletters, I would recommend buying the one that tracks them all: The Hulbert Financial Digest (now a product of MarketWatch.com). Then you can start tracking newsletters on a risk adjusted basis and choose for yourself.