The Stock Newsletter Club provides the following ratings based on overall performance and risk of stock newsletters. Full reviews can be found on the individual pages for the respective publication. The tabulated results are for informational purposes only and are not meant to be be a recommendation. They are based on available information at the time of publication.
It appears that a top level organization with a strong track record can be one of the key factors in finding the best investment newsletters to follow. Motley Fool has two offerings that are top rated; Stock Advisor and Inside Value. Their Rule Breakers and Super Nova have attracted a lot of attention but for different reasons aren’t top rated at this time. The Value Investors Association also has two top publications; The Worthington Stock Letter and Value Arch Stock Report. The Association of Individual Investors has done will with their Stock Superstars Report and recently released a dividend stock newsletter that we’re watching closely.
The Stock Newsletter Club rating and reviews are based on what we feel are the 4 most important factors to evaluate: Performance, Risk, Subscriber Feedback and Reputation.
Performance is the highest weighted factor in our algorithm. Does the newsletters recommendations and advice consistently beat their benchmark? It’s not enough to know which newsletter has the highest rate of return; that actually tells you very little.
For example: For more than a decade gold newsletters were stale and out of favor. Then gold went on a huge bull run and gold newsletters such as the Aden forecast were leading the way. However in the last 2 years gold newsletters are near the bottom in performance as the gold bull as turned into a gold bear.
When emerging markets were on fire, the Cabot China and Emerging Markets letter along with other emerging market newsletters were all the rage and rose to the top for a substantial period. Again their results have really suffered the last couple years as they lagged the U.S. stock market returns. Without the Japan Nikkei their results would have been even worse.
During market crashes such as the dot.com crash and after the real estate bubble income newsletters lead the way. The Fed’s near zero interest rates almost guarantees the short-term demise of this sector.
In the last year any newsletter that followed the bio-tech sector or social stocks did very well. Small cap growth was on fire as well as the newsletters that followed them including Motley Fool’s Rule Breakers and Stock Advisor. And so it goes. Chasing recent performance is a great way for most individual investors to do very poorly.
What we focus on is whether or not the investment newsletter is able to consistently earn a return on investment greater than their investment benchmark.
Risk. Everyone’s temperament for risk is different but their main goal should be to maximize their returns with the least amount of risk which is the essence of modern portfolio theory. There are two main components of risk that we evaluate, liquidity and drawdowns.
Liquidity essentially means how easily one can buy or sell an investment without affecting its price. Penny Stock newsletters or those such as the Stock Superstars Report recommend illiquid stocks that don’t trade a high dollar volume per day. Therefore it takes you a long time to build a decent position in the stock without driving up the price and it will take you a long time to sell the stock without driving the price down. Illiquid stocks also tend to carry a high ask/bid price which increases your cost basis.
A drawdown refers to how much money an investment strategy has lost at any one point in time. If a portfolio is at $160 in value and goes down to $80 at its low point it has lost 1/2 it’s value and suffered a 50% drawdown. There are not many investor who can psychologically handle a 50% drawdown and still make intelligent decisions. Just think about how you felt during the last stock market crash.
While not getting too detailed we don’t take standard deviation or returns and the like into account because we’re not concerned about upside positive return risk, only downside risk. The we don’t look at standard deviations, only downside risk
Subscriber Feedback: In addition to reading feedback sent to us we also survey and scour the network for subscriber feedback and ratings. We take into account the number of reader reviews, the quality of feedback, source of information and reputation management in regards to where the comments originate from.
Reputation: Who puts out the newsletter-does the business or editor have a good reputation? Has the editor or company changed the newsletters name due to previous poor performance? Do they hire people to do paid testimonials or Amazon reviews from sources like Fiverr?
If you ignore these four factors and the advice given in our articles on The 5 Things You Must Know and the 9 sneaky ways stock newsletters trick you, you can quickly find yourself in a hole that is hard to get out of. Our goal is get you into the best stock newsletters depending on your financial goals.
Tier 1 Rankings- Stock Market Outperform
Publication Type Cost/Year
Motley Fool Stock Advisor Growth $199
The Worthington Stock Letter Value/Dividend $197
Motley Fool Inside Value Value $199
Tier 2 Newsletter Rankings
The Successful Investor Value $139
Motley Fool Rule Breakers Growth $249
Buyback Letter Value $195
Prudent Speculator Value $195
Value Line Investment Survey Momentum $598
Dow Theory Forecast Value Value $198
Value Arch Stock Report Value $97
Stock Superstars Report Small Cap Value $199
Action Alerts Plus-Jim Cramer Blend $475
Top Rated-Informational Only
Stock Newsletter Club Ratings/Reviews Free
Hulbert Financial Digest Ratings/Reviews $89
Stock Gumshoe Ad Teasers Free