Stock Gumshoe is not rated highly for their monthly stock picks, but instead for their insightful analysis and dissection of over-hyped stock newsletter promotions. This review will focus on the latter as it’s one of our favorite websites for that purpose. Then we’ll provide some statistics regarding the results of the stocks being promoted by leading stock newsletters that you’ll find very intriguing.
Like a detective, Travis Johnson dissects teaser ads put out by investment and stock newsletters. You see these types of ads all the time, talking about the next breakthrough stock, the alternative investment that can’t lose and the underground investment that only insiders know about, but will be shared for the first time. You know you shouldn’t be the sucker falling for these pitches but they’re written so dang well it’s hard not to fall for them.
That’s where Travis Johnson and Stock Gumshoe comes into play. Like a master detective Travis Johnson puts the ad through his “Thinkolator” to uncover the secret teaser stock being touted. He helps you avoid the hype and focus on what really matters in reviewing stock market newsletters.
I had always wondered what stock Motley Fool and other heavily advertised newsletters were hyping to get you to subscribe to their newsletter, Stock Gumshoe told me.
Here’s another example from a very intriguing advertisement talking about alternative investments and investing in special situations.
In stock terms, a special situation can be a spin-off or something similar. However, in this case, I couldn’t thank Stock Gumshoe enough for saving me a few dollars. The alternative investments turned out to be stamps and art of all things. Good information, but certainly not what I was looking for.
Stock Gumshoe also includes a bi-yearly and yearly update of how the stocks promoted in the ads have performed. Basic tracking spreadsheets are also provided. This is a great way to stop you from falling for the pitches once you see the actual performance of the pitched stocks. They also provide a monthly subscription with their stock idea of the month which is a good way to support their website and cause.
Promotional Advertising Results
We evaluated the results of over 800 investment newsletter ads that they covered. When looking at the following results, keep in mind that the marketing departments for these publications use their best investment ideas (stories) to attract new subscribers.
Here’s what we found. Less than 25% of these heavily promoted stocks beat the returns of the S&P 500. Surprisingly, as a group, they outperformed the S&P due to some big winners. However, if you took out just the 3 biggest winners, the group vastly underperformed the S&P 500. Essentially, buyer beware!
There were only two newsletters who’s advertised stocks beat the S&P 500 or their benchmark. One of them is included in our list of top stock newsletters for their overall results. After a careful review, we discovered that the other has underperformed the market as a whole and is therefore not included.