Investment newsletters are periodicals that analyze economic activity,
track and forecast financial market trends, and strive to provide good
investment advice to their readers. Investment newsletters cater
to the do-it-yourself investor who is knowledgeable and confident enough
to invest without a professional investment adviser, but too busy to track
all of the potential investments himself. Most investment newsletter
subscriptions cost between $100 and $300 a year.
If you're scouting for an investment newsletter that's right for your investment style and goals, here are a few tips to make that decision process easier:
Start out by investigating various newsletters in Hulbert's Financial Digest.
When looking at the performance of a newsletter's equities picks, consider risk-adjusted returns over a ten-year period.
Ask questions about the newsletter's editor: Does he know what
he's doing or has he just been lucky? What sort of education and
experience does the editor have as an investment adviser? Does the
editor have a method that he sticks with through thick and thin?
Find out whether the newsletter is paid to tout certain equities.
Check with the SEC or your state securities regulator to see if the investment newsletter has ever been in trouble.
Be especially wary of investment newsletters that try to hide the fact that they're paid to tout certain securities,
as well as those who advertise false promises such as "High returns, low risk!"
(A cardinal rule of investing is that the higher the potential return on an investment, the greater the risk or potential losses.)
Even if you find a newsletter that fully discloses when it's paid to tout
equities (or better yet, doesn't accept such payments), has a strong
record of consistent performance, and has a knowledgeable and experienced
editor, you still need to do your own due diligence. Don't simply
take the newsletter's advice and run with it; always investigate potential
investment opportunities independently.