The Stock Newsletter Club has analyzed the performance of over 200 investment publications to determine which are the best stock newsletters. Rankings are below. Full reviews of some of the most popular can be found on the individual pages for the respective publication.
Over a couple of decades, we’ve found only a handful that have consistently beaten their industry benchmarks. Surprisingly the price of the newsletter had zero correlation to performance. Just because you pay more for a subscription, doesn’t mean you’ll get better results. It only means the company is better at advertising and getting people to pay more. In fact, some of the most expensive newsletters were also the worst-performing (and many don’t even provide a money-back guarantee).
The Best Stock Newsletters: 2020 – 2021 Award Winners
Update7/1/2021. This is turning out to be a very interesting year. Nate’s Notes currently holds over 25% percent of its model portfolio in one stock, David is no longer making stock picks for Motley Fool and Pendultus Premium has 45% of its allocation in cash. We haven’t seen extremes like this in quite some time. Stay tuned to find out what happens in 2021 and 2022!
BioTech – Technology: Nate’s Notes has a successful track record over a long period of time. His newsletter includes a live Portfolio that you can copy. This eliminates the need to guess how much to buy of what stock and when. Typically he has 20 recommendations that are traded around for a lengthy period of time after an initial position has been established. This makes it easy to follow and mimic his portfolio success.
Early Stage – Growth: Motley Fool Stock Advisor – David’s stock picks only. Market-beating results are due to a handful of highly successful recommendations. The multiple recommendations of these big winners’ offset the losing picks, some with losses exceeding 90%. This is a true buy and hold newsletter, with very few stocks sold along the way. A core list of 5-10 stocks to “buy now” is provided.
Hybrid Value: Pendultus Premium is a value-orientated stock newsletter highlighting 15-20 stocks for investment consideration. Stocks are held for as little as one year up to 3 years on average. Once the stock has reached its intrinsic value, the stock is replaced with another stock. On average, 30- 50% of the highlighted stocks have been dividend stocks for those looking for income.
While not a newsletter we also want to highlight Hulbert Ratings. We highly recommend this website as the newsletters pay a fee to Mark Hulbert to independently audit and track their returns. No deception, no false claims, only verifiable results. Most newsletters avoid paying the small service fee to have their results audited as it can expose vague recommendations and actual returns.
Linde Equity Report: recommends one stock a month that they identify as having the best opportunity to beat the market going forward over the short to medium term. Most stocks are held for less than one year which has tax implications. Some stocks are held for longer periods of time. The returns have been very good, even after taking the effect of taxes into account.
Investment Quality Trends model portfolio. Investment Quality Trends is another newsletter that has provided consistent results while holding up well in bear markets. This stock newsletter has been around for over 30 years, focusing on dividend-paying value stocks.
Stock Gumshoe: this website is recommended for its insights into the latest stock teasers that are being advertised by newsletters and the strong community comments on the site. You can tell by the comments that the website attracts knowledgeable investors that are willing to help others. We recommend you look at our Stock Gumshoe review to look at the results of our testing.
Criteria Used To Calculate Rankings and Ratings
Performance is the highest weighted factor in our algorithm. What we focus on is whether or not the investment newsletter is able to consistently earn a return on investment greater than an appropriate investment benchmark.
If you rank newsletters based only on recent returns it tells you very little. It’s only indicative of what’s currently hot in the market and you end up chasing recent performance. If you chase recent performance, you’ll often enter the market at the wrong time when that sector of the market is overvalued and starts to correct.
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 investors 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 and the like into account because we’re not concerned about upside positive return risk, 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 (avoiding paid ratings/reviews). We take into account the number of reader reviews, the quality of feedback, the source of information and reputation management in regards to where the comments originate from.
Reputation: Do the publisher and editor have a good reputation? Has the editor changed?
Can You Trust Your Stock Newsletter
First, let’s get this out of the way. The market for stock newsletters is saturated because of low start-up costs and a lack of transparency from tracking services to help keep them honest. If you look at current ads, nearly every editor promises the next life-changing investment that will make you uber-wealthy. Despite these grand promises, virtually every stock newsletter underperforms the stock market over time, except a small handful – the top 1-2%.
Sales letters today are like little mystery novels that would make James Patterson envious. These mystery stock ads (called teaser ads because they tease the next great stock winner without telling you what it is) are laden with emotional trigger words. This strategy is very, very effective. No one wants to miss out on the next Amazon and nearly everyone’s brain needs to find the answer to the mystery of what the next great investment is. This leads intelligent investors to set aside their disbelief for fear of missing out if they don’t sign up to find out what the company is.
If you’ve been burned before by these ads or if you’re afraid to follow your stock newsletters picks, you’re not alone.
Studies have shown that the overall returns of these teaser stocks badly trail the returns of market indexes, costing you time and money that may never be made up. The journey starts as a thrilling James Patterson mystery novel but quickly turns into a Stephen King horror story.
Sure, you might get lucky, but overall, you’ll lose a lot of money investing this way. It’s akin to playing the lottery. There will always be some lucky winners that are highly advertised, but the majority lose.
Then there are the financial publishers that use a sleight of hand that would make a magician blush. Diversions to take your eye off their overall returns include showing stock charts of the market’s biggest winners (even if they sold early) or only showing winner stocks and ignoring their total annual returns. They offer vague promises that can’t fail or try to hide the fact that they don’t’ even provide a money-back guarantee, just another year of the newsletter so they have nothing to lose. Dang, they’re good.
The highest risk in subscribing to an underperforming newsletter is not your lost time or the subscription price, but the lost investing monies leading to guilt and disappointment. A lot of you have been there. I was there too in my younger years. That’s why the Stock Newsletter Club was first founded, to discover the truth.
Why do investors continue to subscribe to underperforming newsletters?
Advertisers know that investors can’t resist the siren song of being one of the first to invest in the next Apple or Amazon. They prey on the emotions of investors not wanting to miss out on the next great thing. They want readers of the ad to suspend disbelief and ignore the overall performance and risk of the newsletter as they start dreaming about the riches they’ll gain and how envious their friends will be.
The result tells a different story as the losses continue to climb. While having some big winners is necessary to beat the market, academic research has shown that more money is lost chasing hot new companies than just about any other investment approach.
If you want to stack the odds in your favor, make sure you’re subscribing to the best of the best. We’re here to help guide you in that decision.
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 to get you into the best stock newsletters depending on your financial goals.
The tabulated results are for informational purposes only and are not meant to be a recommendation. They are based on available information at the time of publication.