Despite the fact that I advocate learning how to invest yourself as the absolute, hands-down best way to manage your money, I also know that the overwhelming majority of investors constantly seek out get rich quick schemes and whatever shortcut they can find in order to get rich. In fact, Iâ€™ve often fielded ridiculous questions like â€œWhatâ€™s the best way to double my money in a month?â€
The large number of investment newsletters realize that people are thirsty for get rich quick schemes, and now that there are always a fraction or people naÃ¯ve enough to buy into them as long as the copy is convincing enough, so thatâ€™s what they sell â€“ dreams of getting reach with very little effort. Donâ€™t get me wrong. I have come across one or two excellent newsletters in my lifetime. Still, the very few excellent ones also reiterate my cautions â€“ that you must already know how to pick stocks and manage money to benefit from their services. The great majority of newsletters however, possess the below 7 faults:
(1) I have yet to see a newsletter that picks 30 stocks and tells you to buy every single one of them. Newsletters often give you two or three times as many picks and then sell you by placing only the best performing stocks in their ad copy to convince you of the superiority of their picks.
(2) Newsletters often tell you what to buy but not what or when to sell. Half the equation of making money is knowing what and when to sell. Most people want stock picks spoon-fed to them so they donâ€™t have to perform any research. If you want to know what and when to sell, you have to be informed about all stocks you own, which defeats the â€œsaving timeâ€ reason for buying newsletters.
(3) I have often seen egregious errors in the analysis of the â€œbestâ€ stock picks of newsletters Iâ€™ve investigated, even from newsletter writers that have PhDs and CFAs attached to their names. Their errors have been so bad that they totally changed the risk-reward set up from good as they have written up the analysis to bad if you look at the real situation. All newsletters that Iâ€™ve seen have disclaimers that exonerate them from such mistakes. Blindly depend on them and youâ€™ll also suffer from their mistakes as well.
(4) Even cherry picking their best performers, many newsletters offer very deceitful numbers when they speak of returns. They offer the returns that would have been gained from buying at the absolute bottom and selling at the absolute high within certain time periods. Options newsletters are even more notorious for inflating returns with this practice. However, your chances of consistently buying at absolute bottoms and selling at absolute highs time after time after time are zero.
(5) Many newsletters concentrate on just one asset class, preferring to be experts in one area and convincing you that you are much better off with them because they are the leaders of knowledge in their particular field. Well what happens if that asset class is out of favor for the year? Even the best picks wonâ€™t perform well. You still need to be able to identify what asset classes have the best chance of outperforming every year to know what newsletters to buy. Again, seems like youâ€™re best off relying on yourself.
(6) Be very wary of newsletters that charge low fees such as $100 to $300 a year for their services. Think about this. If you own a business, how willing would you be to give your service away for only $100 for the entire year. Newsletters depend on volume to make money. If I charge $100 a year for my newsletter and can get 10.000 people to sign up, Iâ€™ve just made a $1,000,000 for the year. If my concern is getting volume, Iâ€™m 1000 times more concerned about writing a convincing sales pitch than actually providing great, valuable information. So what if I lose 300 subscribers a year? With superior ad copy, Iâ€™ll easily replace them next year.
(7) Beware the high pressure pitch. Again newsletters are experts at ad copy. Buy today to get stock picks that will return 1,452% by June 3rd! Offer expires tomorrow at midnight! I can make over 1000% returns in six months? Of course I want to buy in, right? Ever heard of the saying that what seems too good to be true is too good to be true? Iâ€™ve investigated at least 5 separate claims such as the ones made above with five different services and in every case, not only had their recommended, canâ€™t miss stock not come close to reaching their target by the specified date in their ad copy, all 5 stocks had lost money!
Anytime, you do really well with the stock picks of a newsletter, it is going to be because you know what youâ€™re doing and youâ€™re able to identify the best picks out of the lot of stocks that a particular newsletter advocates. If this is the case then obviously you have done a fair amount of learning already. Why not just take the extra couple of steps it takes to be entirely self-sufficient and take your returns to the next level?
This article may be freely reprinted on another website as long as it is not modified, changed, or altered in any way and as long as the below author byline is included along with the active hyperlink exactly as is.
J.S. Kim is the Managing Director of SmartKnowledgeUâ„¢. He has over thirteen years of experience in finance and financial services, and has earned a BA in Neurobiology from the University of Pennsylvania, a Master in Public Affairs from the University of Texas at Austin, and an MBA with a concentration in finance from the McCombs Business School, University of Texas at Austin. He is the inventor of the revolutionary MoneyPingâ„¢ investment strategies, a novel approach to learn how to build wealth, not just dreams.
To learn more about how to achieve financial freedom, and investment ideas to dramatically decrease risk and intelligently increase the probabilities of 25% or higher annual returns, click the following link Advanced Wealth Planning Techniques and Achieve Financial Freedom Ideas http://www.smartknowledgeu.com/