Sunday, August 17, 2014

Finding Undervalued & Under Analyzed Stocks and Companies: Not All Investment Newsletters Are Equal

About one year ago we wrote an article titled "Penny Stock Newsletters and Penny Stock Pickers: Using Them To Your Advantage" discussing how you could use "penny stock" newsletters and stock pickers to your advantage.  This included trading on information provided, avoiding information all together and other tactics for leveraging the information dispersed by these newsletters.  But not all newsletters are built equal.  Outside the vein of penny stock newsletters there are actually some newsletters and reports that are worth while.  The issue is weeding them out.

Trust No-One and Ask a Bunch of Questions
In a 2013 article by Barron's title "Newsletter Returns: Be Skeptical", Mark Hulbert took an in-depth look at newsletters and found some investment advisers on the take (from companies they were promoting) or just plain lying about their returns on their newsletters.  Some were even truthful, it was just that the way they calculated their numbers could mislead a novice investor.  For example, when calculating annualized returns, on publisher stated that he calculated 145% annual return by taking "every single closed position — both stocks and options — since we launched the service…. The average gain per trade was 19.7% and the average holding period was 74 days. If you annualized that, you get the 145%."  While this is correct, the novice investor would be unaware of this tactic.

I must also add, the novice investor should not be investing in the stock market.  The stock market, a zero-par game, is for sophisticated investors.  A professor in business school, a graduate of The Wharton School of Business, once told me "Stock are among the riskiest asset classes when compared to real estate, bonds or cash...if you don't know what you are doing you can lose you shirt".  Make sure you know where you stand.  

Seek Credibility and Ask For a Free Trial and Tip Toe In
Before you rely on a newsletter....wait....you should never solely rely on one newsletter.  It should be taken in conjunction with many other sources of data including but not limited to financial reports, SEC filing, company press releases and more.  Always continue your homework.

Seek Credibility: While some big newsletters such as TheStreet by Jim Cramer or Fool.com seem credible, you have to look to see who exactly is writing the report, research or investment newsletter.  It is not always the case that the writer have the credibility the site does.  This also goes for smaller newsletters.  It is not always the case that a small website found on page 6 of Google is not credible.  Some are written by very intelligent teams.  For example, The Focused Stock Trader, an investment newsletter covering undervalued companies, is well written and researched by a team of financial professionals.  Always seek the resumes and credentials of the team of contributors.

Ask for a Free Trial: Some reports will say that their service is so good that you need to pay.  Okay, we will bite.  But first, prove it!!!  Most of the best and most diligent stock newsletters allow a free trial to get you started.  This will allow you to gauge the quality of research and reports you receive.

Not all investment newsletters are equal, sometimes bloggers offer the best advice and sometimes they come in an email blast.  The digital age has your work cut out for you.  Take a look at some of the links in this article and let us know what you think about their services.  Have you had an experience with an investment newsletter that you would like to share?  Comment below with your thoughts, comments or insights...


-The MicroCapCompany Team
Follow Nicholas Coriano on Twitter

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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The MicroCapCompany.com a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on PushYourRank.com

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email CervitudeNetwork@gmail.com, If you would like to advertise on The Blog, click here

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